The 7 bank accounts every family should have

I'm sure many of you have heard of this “The 7 Bank Accounts Every Family Should Have” post. It was from quite some time ago and was in need of some updating. Plus when I launched our new site, it messed up the formatting (so sorry for anyone who has read it recently, it was a mess!). Here is the newest version, perfect for our Focus on Finances month-long challenge. Enjoy!

Most of us have two accounts – one saving, one checking. Have you ever considered opening MORE accounts to help you organize your money better? If not, then you should! For my husband and I this is one of the single easiest things we did to get us out of our scary financial situation…and fast. And no, you don't have to have lots of money to do it. In fact, we were living paycheck-to-paycheck at the time and were in the red most months.

This post all started because I did it in a live TV Segment (watch that HERE), and it went viral since then (it was even featured on LifeHacker)! Plus, it inspired me to create a budgeting program surrounding the strategies that pulled us out of our financial disaster – Budget Bootcamp! (Promo code: FCFBLOG will save you 10% off the total program price! SCORE!)

I hope you are able to find a way to make this system or a similar system work for your family. If it helps even a fraction of how much it's helped my family, I am happy for you in advance :). Without further adieu, introduce to you…

The 7 Bank Accounts Your Family Should Have

When you file your important papers, you keep them all in the same filing cabinet. But are they in a big pile inside the cabinet? No, they are in multiple filing folders to compartmentalize, organize, and help you keep track of things you need.

So if your papers aren't tossed into one big drawer, why would you toss all your money into one big bank account?

Most families have one savings account and one checking account. This is has been the norm since dinosaurs roamed the earth. While it works well for many, I challenge that having only one or two bank account can make it harder to keep track of your money. The fact is, MOST families statistically have trouble making and keeping a budget. This tells us that the system might just not work that well!

Thus, I'm going to propose 7 bank accounts your family should consider opening that will help you organize your money and save your family thousands.

First things first…the biggest question I get is “Doesn't having lots of accounts hurt my credit, cost me extra, and make life more complicated for me?” Simple answer…no. Or, it shouldn't, anyway. It won't hurt your credit unless you get into debt or don't pay your bills on time. And believe it or not, as confusing as it looks on paper, if you commit to the system, get organized, and take the time to do it right, it will actually simplify your life! If it costs you money to open an account, CHANGE BANKS. In fact, many banks will pay you to open an account with them! So don't be afraid to change banks. It won't hurt the bank's feelings, I promise.

Before I break down the 7 accounts in detail, first a probing question…

How do you track 7 different accounts?

If all of your accounts are with the same bank (most of our accounts are with Chase in our family) then your online bank dashboard will have all your accounts handy in one place. Each account ties into your family budget… and, speaking of budgets, have you checked out my secret sauce financial program, Budget Bootcamp? Just asking, because since you're here learning about budgeting… now is probably the perfect time! I dish out all my best tips, tricks and techniques to mastering your budget, and getting in a better financial situation! Enter code: FCFBLOG to save 10% off the total program price. It's an investment you're guaranteed to feel good about!

If your accounts are all open with different banks, you can use Mint.com which is a free service that pulls information from all your banks and presents them on a single dashboard. They have a fantastic mobile app that my husband loves more than bacon some days. You can even pay bills from Mint. All in all, if you're willing to use a computer and phone to do your banking rather than a pen-and-paper, this method will save you time AND money.

Now, here's a further breakdown of the 7 accounts highlighted in the video:

1. Family EMERGENCY savings:

Purpose:

As a rule, 20% of your income should automatically go into savings each month, and this is the ultimate account for your savings. As a rule, this account is for absolute, dire “we are going to lose our house next week if we don't do something” emergencies. Picture it as the fireproof apocalyptic vault hiding behind concrete walls in your basement, or the piggy bank you have to shatter to open. You should never touch this account unless it is your absolute last resort! And it should never be for anything that can be resolved in other ways, including paying off debt. Having 6-12 months to live off of is more important than any credit card payment you could ever make! Hopefully you will never have to touch this account…but good thing you have it if you ever do.

Rules and tips:

Savings money should be automatically withdrawn from your paycheck every month (20% ideally) and deposited into this account. You should pretend that this money doesn't exist when considering your income/budgets.

It needs to be an “out of sight, out of mind” account. Don't even bring it up when calculating your money as a family, and NEVER consider it as an option for pulling money out of when needing to pay for something…unless it's a literal life-or-death situation.

You can open this in any savings account, but I recommend opening this account through and online bank like ING or E*Trade (HERE are lots of great options) because it's harder to withdraw money from, and is easier to keep “out of sight”.

Note *It certainly doesn't HAVE to be ING or E*Trade (in fact, there could be better options out there now, we've had those accounts for years). Just pick a bank outside your regular bank so that the account doesn't pull up every time you log in to your regular bank. You really don't want to be tempted to touch the money in it. EVER.

How much to have in this account:

You should have enough to live on for 6-12 months (12 is your goal, don't stop until you hit at least 6).

You should aim to put 20% of your earnings into savings every month. When starting out, put 10% into this emergency account, and 10% into your family regular savings account (see next) until that account is built up to 3 months living…then go back to putting all 20% into this account.

Ideally you would never stop depositing 20% of your income into this account, unless you were to lose your job and needed that % to live off of.

By having a Family Emergency Savings account that A) you automatically draft money to each month, and B) you NEVER pull money out of, you can effortlessly protect your family from the worst-of-the-worst circumstances.

2. Family REGULAR savings:

Purpose:

Note: This is updated since the original post!! So yes, this is now conflicting with the TV segment video slightly 🙂

This is your “holding tank” account; the savings account that you can tap into when needed. This account is used told hold 3 months worth of cash to live off of at all times in case of a short-term emergency. It's mainly used to hold money you are using to save up for something pre-planned (down payment on a house, new bedroom furniture, major home repairs, family vacation, new car, upcoming wedding, etc.), and to pay for unexpected expenses and emergencies (car repairs, new tires, unexpected home repair, etc.).

Rules and tips:

Automatically draft 10% from your paychecks to this account every month until the 3 months of cash is saved up, with the other 10% going to your Family Emergency Savings (above).

Once 3 months of cash is reached, no more automatic deposits from your paycheck into this account – only deposit leftover money at the end of the month. If you need more money in this account, you're going to have to cut back on your spending throughout the month! You never want to stop depositing the 20% into your emergency savings unless it's an emergency.

This savings account can be at your normal bank. Try to find a bank that will pay you to open a savings account! You can get paid as much as $75-$150+, just read the fine print and make sure there are no hidden fees.

You need to have a plan for the money in this account! Don't get in the habit of pulling money out of this account regularly – it needs to be for big purchases that require advance planning, or emergencies only.

How much to have in this account:

Since this is the account used to save up for big expenses, so the total amount in this account will ebb and flow. However…

As a rule, always keep a balance of 3 months living expenses in this account, so you can live off of it if needed for a short time before having to tap into your emergency savings.

When using this account to pay for a big purchase, make sure to save up the full amount before buying.

Ex: Let's say I have $15,000 in the Family Regular Savings, which is 3 months to live off of (let's say – for easy math). Then, let's say we are anticipating needing $2,500 for a down payment on a car soon. We will need to be patient and save up the full $2,500 BEFORE putting a down-payment down, so that $15,000 remains in there as a constant balance. Remember, you need that $15,000 for emergencies – whether it's to protect you in case you lose your job, or someone needs emergency surgery that insurance won't cover. Don't spend that safety net!

By having a Family Regular Savings account you have a “holding tank” delegated to help you save up for anticipated expenses, and help you pay for unexpected expenses, and protect your family in case you need to live off of savings for a short time.

3. Family checking:

Purpose:

This is your “home base” account; the account where all paychecks/sources of income go initially. Your money starts here, then is transferred and allocated to other accounts. This is where you pay for minor car/home repairs, oil changes, utilities and all other bills (except for medical bills, more about this below), tithing/donations, and other “family” expenses.

Rules and tips:

All bills are paid from this account, preferably on auto-pay when possible to avoid late fees.

Money shouldn't stay for long in this account, because it will be divided up and allocated to other accounts shortly after depositing your paycheck.

Set up auto-transfers to other accounts to streamline the process of sending your money where it needs to go.

Once all your money has been deposited to this account and sent to where it needs to go, it will be easy to see if you have money leftover at the end of the month! Big pat on the back for leftover, un-spent money! Any money leftover in this account should go to Family Regular Savings. If you have 3 months living saved up in that account, have no debt, and don't need to save up for a big expense, then put half of the leftover money into your Slush Fund (below) to save up for something really fun! (and the other half into your Family Regular Savings).

How much to have in this account:

Enough to cover your expenses for the month, trying not to have much excess leftover. Any excess money needs to go to debt FIRST, then back to your savings accounts once your debt is paid off. If it sits in your checking account, you will most likely spend it!

But make sure you have enough in your account that you don't ever overdraw. The best way to figure out how much you need is to look at your spending habits from the last 6 months. Total up how much you spent every month, minus major emergencies (because that would come from your Family REGULAR Savings – see above). Average it out and start from there. See how to easily track your monthly budget and find good budget parameters HERE.

Be sure to keep your bank's required minimum amount in this account at all times. Read the fine-print with your bank to make sure you don't get slapped with any fees for not keeping a certain minimum amount in that account.

By having a Family Checking Account as your “home base” account, it makes it easy to send your money to their individual “jobs” (aka other accounts), and makes it simple to see how much money you have leftover (or how much you are short) at the end of the month!

4. Wife's checking:

Purpose:

Wives, I'm talking to you!

Your monthly budget drafts from the Family Checking Account (see above) to this account every month. The money you spend for the month however you see fit. Whether you use cash, debit card, or credit card, it all comes out of this account. It makes it easy to keep track of your budget, will make it hard to over-spend, and will allow you the autonomy to use your own methods for budgeting and spending for your family, and will give you a place to keep your own “fun money”!

Rules and Tips:

You should use this money to cover your budgeted expenses for the month, which needs to be determined in advance by each individual family. (See tips on this HERE).

Sit down and write out every single thing you spend money on, then divide up responsibilities! If you do the cooking, you should buy the groceries so you know what you need. If your husband is the car genius, he should be in charge of paying for car repairs. Whatever you're good at and handle regularly, that's what you should be in charge of. No, not in a sexist way, it's not about that – at all. It's simply for your family's budgeting purposes so you know exactly who is in charge of paying for what each month! Again, decide what works for your individual family based on the things you do regularly for your family anyway.

Once the money has been deposited into the your account, you spend the money however you see fit, ensuring you cover all of your responsibilities.

If you run out of money before the end of the month because of poor budgeting, you need to tighten up and go without until your budget starts over the next month. If you run out consistently, consider revamping the budget slightly to give sufficient money to cover all budgeted expenses reasonably…but dig deep to see if it's spending habits or budget amount that are the real problem.

If you have leftover money, rather than spend it you should contribute to your Slush Fund (see below)! Trust me, you'll be happy you did.

The money for this account should NOT include “family” expenses such as utility bills, home and car repairs, medical expenses, and large expenses like braces, new furniture, etc. These expenses should be put on auto-pay from the Family Checking account, should come out of the Family REGULAR savings when needed, or from the medical HSA account (see below).

The money you spend for the month – whether you use cash, debit card, or credit card – all comes out of this account. If you pay for things with a credit card, pay off the card using the money from this account BEFORE you're slapped with any interest fees. If you use cash, divide your budget up weekly (rather than monthly) and pull out exactly what you need each week to pace yourself. See more on this HERE.

Whatever is left over is your fun money! This rewards you for being frugal. So you can decide…”Sure, a $5 pizza would be easy for dinner tonight…but if I save that $10 and cook at home instead, I could go buy a scarf from TJ Maxx instead!” Gives you the freedom to choose 🙂

How much to have in this account:

This ultimately depends on your individual family situation! But in general, just enough to cover your financial responsibilities for the month.

A few guidelines for forming this budget:

A good guide for grocery budget should be $100 per family member, per month. This includes food, toiletries, baby needs, pet needs…basically anything you could find at a typical neighborhood grocery store. I use Deals To Meals to help cut my grocery bill in half by finding what's on sale and price-matching it. See how I grocery shop for complete details.

For everything else (I call this “other”)…and remember that this does NOT include utilities or bills… add up what you've spent money on for the last 3 months that would apply within the bounds of your spending responsibility, divide it by 3 to find the average, then knock it down by at least 25%-50%…because we usually spend more than we need to.

5. Husband's checking:

Purpose:

Same as wife checking. This is the account you use to pay for your budgeted monthly expenses.

Rules and Tips:

The same rules apply as with the “Wife Checking” account.

How much to have in this account:

The same rules apply as with the “Wife Checking” account.

By having Husband Checking and Wife Checking accounts this gives each parent autonomy to spend however they see fit while still being held accountable for the overall budget amount. It motivates them to be frugal where possible, helps allocate spending responsibilities for a family, and makes “who is in charge of what” clear and concise…which leads to less fights about money!

6. HSA (Health Savings Account):

Purpose:

This is a tax-free savings account built specifically to hold money to pay for any kind of medically-related expense, large or small. Basically it's like a normal savings account with a debit card and everything. Except this debit card can only be used at pharmacies, Dr's offices, chiropractor's office, hospitals, and other approved medical facilities. It's a perfect way to set money aside for medical costs so it doesn't eat into your savings, and doesn't have to come out of your wife/husband budgets.

Rules and Tips:

HSA's work best with more affordable, high-deductible accounts. With lower-deductible accounts, most of your money is going to a premium each month. You pay it, whether you use it that month or not. With a high-deductible plan, you pay for only what you use and still gives you protection for catastrophic events.

You get an HSA debit card to be used to pay for every medical expense (and only medical expenses). It's used for anything from a doctor's office co-pay or prescription from a pharmacy, to having a baby or paying off surgery.

Why use an HSA instead of a standard savings account? Any money deposited into an HSA is tax-free. For those who need a few thousand dollars a year (or more) to cover their family medical costs, this tax savings can be substantial.

“An HSA is all yours. Whatever you don’t spend stays there from year to year, earning interest tax-free. It’s yours even if you change jobs; and once you reach age 65, your HSA turns into a retirement account.

HSAs are available through banks, credit unions and insurance companies. Many employers now offer HSAs, as well. You may enroll in an HSA is you have an HDHP and no other health insurance. If you are enrolled in Medicare, you cannot contribute to an HSA, the Treasury Department says.

If you change jobs, your HSA goes with you. The money in your account earns tax-free interest, just like an IRA.

Young people in good health may benefit the most from an HSA, because they tend to have lower medical bills, and over many years the accumulated savings can be significant. Also, if you lose your job or are laid off and are collecting unemployment insurance, you can use your HSA funds to pay for routine health expenses and health insurance premiums, tax-free.

People who have lots of doctor office visits, such as families with small children or people with chronic health problems, often pay more out of pocket through an HSA than through a health maintenance organization.(healthcare.utah.edu)”

MAKE SURE to read the fine-print. Some HSA's are “use it or lose it” accounts, or have fees attached. Both of these things are unnecessary.

How much to have in this account:

You should have enough to cover all perceived medical expenses for your family for the year, without depositing too much extra. Obviously this will vary from family to family. Look at your medical bills for the last year (or even two!) and use that as a place to start. Deposit what you can afford each month. For my family, we have $400/month automatically withdrawn from my husband's paycheck and put automatically into our HSA…in addition to setting money aside in our Family Emergency Savings and Family Regular Savings.

For my family, we deposit $400/mo into this account and we consider this as port of our 20% savings.

By having a Health Savings Account it will keep family savings accounts full and organized, and ensures sufficient funds to pay for medical expenses. It prevents having to dip into the Family Regular Savings account to pay off medical bills, and is a great solution for affordable healthcare. It helps you plan and prepare for expected and unexpected medical expenses, allows you to only pay for the healthcare you use and need, all while giving you tax-free savings.

7. “Slush Fund”:

Purpose:

Optional 7th account. Think of this as your spare change jar. This is the account where all extras go. At the end of the month your debt bills are paid, your 20% has gone into savings, all accounts are accounted for, and you still have extra!

Toss it in here, and this is your 100%FUN MONEY account! This money does NOT go toward bills or mundane things in any way. Once your debt is paid off, and your savings is under control, this account is your reward for spending wisely. Picture the movie “Up”. They had their Paradise Falls savings jar that they threw their spare change in for years.

But they kept having to break the jar open to pay for emergencies and other things that kept them from ever going to Paradise Falls. Don't let this happen to you! Keep other jars for emergencies, and keep your “fun money” jar for just that…fun money.

Rules and Tips:

You need a plan for this money. It could be for a new TV, vacation, a trampoline, or something else fun that your budget might not allow for otherwise.

Example: For my family, we want to go to the 2016 Olympics in Brazil but we are working on building up our Family Emergency Savings right now, thus, we don't have any extra cash to start saving for the vacation. Spare money here and there goes into our Slush Fund (extra birthday money, leftover budget, etc.). While we only have $255 in there right now, that's $255! Of spare money! Our goal is to grow that over time so when 2016 hits, our vacation is paid for.

Get your family involved on this goal. Have it be a community fund where any extra money gets contributed toward a common, exciting goal. Make a chart for your fridge, or put pennies in a jar to represent every dollar put in the account. Make it visual, fun, and exciting for the family.

Sadly, you really should only put money toward a slush fund once your debt is paid off (except your house) and have 6-12 months to live off of between your two savings accounts. But hang in there, take care of your family first, and the fun “extra” money will come soon enough!

How much to have in this account:

This depends on how conservative you are with your spending! This account only holds EXTRA, un-spent funds, so the less you spend throughout the month, the more you will have in this account.

This account may build up very slowly. It may be as simple as $10 leftover in a grocery budget from the week, or $100 of a tax return that wasn't needed for other accounts, or leftover birthday money that a child wants to contribute. Think of it as your spare change jar that sits in your laundry room. Instead of throwing your ‘spare change' in a jar, throw it in this account!

Setting a goal for this money is key, so it doesn't burn a hole in your pocket too early!

By having a Slush Fund Account this encourages a united excitement for spending wisely as a family. It gives everyone a common goal to work for, and allows for a family to spend money on something 100% fun that they might not be able to spend money on otherwise. It encourages saving, budgeting, and delayed gratification.

Technically, the list could go on to 8 and beyond. But since it depends on how many kids this next one has, I will leave this as “additional accounts”…

8+. Kids' Savings and Checking accounts.

For every child you have, I propose opening up their own checking account, and savings account. From day-one you could be drafting a few dollars a year (or however much you can spare) into their savings account, helping them to save up for college, their future wedding, a religious mission, etc. It's also a great place to deposit their birthday money into it when they're too young to really use or care for money yet.

Once they are old enough to make their own money (allowance, work, babysitting…) you should encourage them to put at least 1/2 into savings, and to manage the rest into a checking account. Teach them to write checks, use a debit card, the whole 9 yards! Yes, even an 8 year old can understand these concepts if you teach them well enough.

Start your kids off on the right foot; being financially wise, secure, and comfortable with finances in the real world.

So, there you go!

Rather than tossing all of your money in to one savings and one checking account, try opening these 7 (or 8 or 9 or 10…) accounts. It may be just the step your family needs to get your budgeting and spending on-track! Let me know how this works for you, I love getting your feedback 🙂

If you’re new here, welcome! You can get all my budgeting and finance tips, and my secret sauce in my fun-to-watch video program Budget Boot Camp! You have nothing to lose because if you don't save or earn at LEAST what you paid for it, I'll give your money back. So use the code FCFBLOG at checkout to get an extra 10% off, and give it a try!

Comments

I am new to reading your blog and I am enjoying learning and hearing about ways to save money. We just moved but before the move we had about 7 different accounts and I felt it was was easier to manage the money and keep us with more money at the end of the month. I thought I was crazy but I think I am going to go back to it! Excited to keep up with your blog.

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Thanks for the info. I am going to try this. We have such a hard time budgeting!
You might also suggest an additional account that you use strictly for online purchases. Our bank gave us one with no fees so that when we are ready to purchase something online, we simply transfer that amount of money into it. This way, if your account info is hacked, the perps won't have access to anything more than an 'empty' account.

I would have kept the same accounts but we moved to an area that did not have that bank.
I had "chad checking" which was where my husbands payroll went and the mortgage was paid out of
"check writing checking" money transfer from the other account to pay bills
"christmas club" which was an account you open and can not get the money til your year or however much time you set it up so we usually put money in that for a summer vacation
"2 kids savings" where we would put money they get from their birthdays and christmas presents to help us pay for their next birthday and christmas
"credit card account" helped to pay off the credit card and student loans.
My husband never understood where the money was coming and going but it worked for me. Before I had my kids I worked at the bank so I knew the ins and outs and that helped me keep things organized. Online banking and Quickbooks at home helps me keep it all in line.

I have to admit that this post made me feel pretty awesome because we do in fact have like 10 accounts I swear it. We have an emergency savings, joint checking account which is for non-bill expenses like food, gas, and other fluctuating expenses. We have an allotment that goes into our bils account that covers all our of regular bills such as car payment, cable bill, insurance, and whatever other predictable monthly bills we have. I have all these bills set up on automatic deduction or automatic payment so I don't even have to think about them. Perfect! Then I have my own budget account and my husband has his. This is free spending money for us but it does include gas, cigarettes for my hubby and anything else that is used by just one of us. My husband is a spender and I am a saver so this works really well for us. He can spend as much as he wants out of his account and I can be a stingy as I want it doesn't affect each other at all. Then we each have our own personal savings and we have a family savings that allows us to put aside whatever extra money we didn't spend. Extra joint money goes into joint savings at the end of the month and extra personal savings goes into our personal accounts. For us it works perfectly. Thanks for the motivating post!

Is this not the same way Dave Ramsey does with cash in envelops for each expense? I had always wanted to use the envelop idea but I like using my check card. I dont carry a large purse or wallet and the evelops could get stolen and then where would you be. This way it can be reported and you dont lose any money. I like the idea and hope to incorporate it more. We have 2 savings accounts and 2 checking, one checking is for bills and one for groc, gas and what ever else. but one or 2 more checking accounts for gas and groc would be great. thanks for the idea!!!

I worked with banks/credit unions for years and I’ve never heard of anything about having too many bank accounts. Many banks/credit unions will pull your “credit” when you open a checking account, but its just a record of other places you have banked, I’ve never seen actual credit pulled,. Too many credit cards could be too bad, but too many depository accounts? I wouldn’t buy it.

This seems really brilliant to me! My fiance and I are getting married next month and we're both a bit spendy, so I was a little worried about this aspect of our lives. I'm going to pitch this idea to him tonight!

I just found your blog and these ideas are great. At the beginning of this year, I opened up an account at a new credit union and have about 7 "sub accounts". My husband gets paid weekly so it makes it hard to keep track of spending so these sub accounts act as holding accounts for large expenses such as mortgage, insurance, HOA fees, etc. An allocated amount is automatically deposited weekly into each account and the rest goes into checking. I have a budget on the checking account so if the paycheck is larger than the budget, it goes right into our savings/slush fund.
People think I'm crazy for having all these accounts but it helps keep me on budget and provides an automatic savings plan for our family. If we didn't have these accounts, we would have no savings at all!
Kathleen
P.S. Because all of my accounts are at the same credit union, I have no trouble keeping track of all of them.

this is awesome, before i was laid off i had 4 accounts, 3 checking and 1 savings. my checking accounts served different purposes and my bf thought i was crazy and would tease me until a weekend trip came up and i never asked him for any money. he asked how i paid and i told him my travel account. he was impressed. i cant wait to get out of school and get married to do this. who ever said this was crazy is crazy. very organized way sort and keep up with money

i wanted to say i LOVE this since you talk about multi accounts and mint.com…
-we have 5 accounts; tithing, household, allowance for each member of the family and the emergency/big purchase fund.
-you want the emergency/big purchase fund to have the highest bal possible and be located in an interest bearing account… most accounts out there right now offer bub-kiss for interest so if you have a TON in this fund, move some of it to an IRA or rolling CD, make the most of the funds you arent using actively to make more money
-our allowance funds are a set amount for each member to spend as they wish without approval from anyone else, you can use it as it comes in or save for a big ticket item.
-i don't like the idea of wiping accounts clean at the end of each month into slush as this seems like an extra messy step and most banks will close an account if it comes down to a 0.00 balance. – if what the wife and husband spend are normal budgeted expenses they should be under the household fund.
*** note we also use 2 major credit cards for all purchases to earn rewards points and track what is considered household and allowance via mint.
-ever since mint was created i have been an avid user and recommend it to all who are trying to save for a home or car. we were able to become debt free and save to buy our first house with this tool and save for a 50% down payment on a car too.
-we also take the time to move any bonuses or refunds into our big purchase account so they can earn interest while we are deciding what our next household project will be.
yay for getting people interested in a smarter way to manage funds!

Hahahah you’re not debt free if you have two credit cards and a car payment! If yo’re paying interest- it means you have debt. And anyone reading- don’t buy into the lie that you can manage a credit card and beat the system. 100 million Americans didn’t pay off their credit card last month – that’s one in three Americans, and we know not every American has a credit card. So does that mean that maybe one in two Americans with a credit card didn’t pay off their balance, and they’re now paying interest? Conceivably, yes. Give me a break- the credit card companies are making billions and billions of dollars a year in interest. Don’t buy into the “rewards” crap. Use cash, and pay yourself. Stay out of debt and build wealth, not credit!

Ouch! Not everyone who has a credit card uses it irresponsibly. My husband and I have one that builds up miles and we use it every year to fly free to visit our family. Only the major expenses go on it (mortgage, electric etc) and then it is set on auto pay to pay off the full amount every month. We don’t touch it for anything else. We have another for when we travel to avoid scams (and it has happened). Credit cards are much easier to deal with when someone steals your card number and not everyone is comfortable carrying that much cash. When we do this we have a pre-set limit we are spending and we DO NOT go over it. I do agree that if you have not set a budget and kept to it for a few years then credit cards are far too tempting to use and should be avoided like the plague. I’m just saying that once you have learned discipline it is not only irresponsible people who use them.

Well said!! My husband and I use credit cards exclusively and we love the extra cash it brings in! But it took us a few years to get used to not going over, so we started with cash until we got the hang of our budgets. Thanks for sharing!

(Oh, and I have lord knows how many credit/store cards (you get more discounts that way) and I never have a problem paying them off. I pay the store cards from my personal “fun checking” account. Also, paying with a credit card helps me know where I spent my money and I use Mint.com to track it.)
BUUT…. when I was young I learned how to budget with cash, so when I got married and my husband used cards and paid them off, I eventually got used to his system but was already trained to be thrifty. It sure hurts a lot more to hand over cash than it does to swipe even a debit card!!

I’ll second that ouch… My husband & I also use credit cards regularly and manage to stay “debt free” because we pay off the balance monthly and do not earn interest. We also paid for all of our Christmas gifts the past two years with perks from those cards. I agree that not all Americans know how to do this. I also agree that credit card companies are in the business to make money so thats what they’re going to do. But if you can be smart about it there are definitely benefits there…why not see if it works for you?

What complete nonsense! Millions of Americans are able to use credit cards responsibly. My wife and I use a joint card for all our household expenses, we pay the balance in full every month, and we get 1.5% back on every purchase we make! We each have a personal card for “me” purchases, and we pay those off every month as well. We’ve never paid a dime in interest, and have in fact saved hundreds, if not thousands of dollars over time this way.

I can understand counseling against credit cards for someone who has poor impulse control. But don’t assume that because you lack the self control to manage a credit card that everyone else is similarly weak minded.

We also have a checking account for Christmas. Any Christmas gifts, Christmas tree, decorations, as well as all the extra baking food/supplies for all the neighbor/visiting teaching gifts/treats you have to give, (16 lbs of butter and bulk sugar and chocolate chips from Costco) all comes out of the Christmas account.
A separate account for annual vehicle registration is a good idea too. Estimate next years registration fees for all vehicles and divide by 26 (or however many pay checks you will get before the registration fee is due) That way you don't all of a sudden one month owe $300 that you didn't save for, for registrations!
An account for birthdays would be nice too. Not each person's birthday needs their own account, but it would be nice to have money set aside for party supplies (party favors, paper cups/plates, streamers balloons etc. they add up), the birthday cake, food, gifts for your own kids, as well as all the birthday parties your kids get invited to. (I don't think my son's friend's birthday gift needs to come out of my grocery money.)
We have several accounts, and we like this, it works for us. (We each also have our own "play money" each month, which I usually spend at Joann's on needless craft supplies & fabric, my morning Dr Pepper, and also my Massage Envy membership.)
You could go super crazy and OCD and start accounts for back to school clothes/supplies, annual vacation account (which we have for our annual family reunion) etc. My father in law is a CPA. He has one savings and one checking, but man alive you should see the spreadsheet he has for each one!

I love the idea, in fact I had 4-5 accounts opened at once…then my bank got taken over and Chase decided to start charging fees if you didn't have a minimum balance or a direct deposit. Now I have a checking and 2 savings (at a different bank!).

I keep track of expenses and projected expenses in Quicken. I recently dumped all my savings into one account, but keep a breakdown of how much I have in each 'subaccount' as a separate entry in Quicken. (I reconcile the expenses to each subaccount as they come through my regular checking.)

I'd love to have separate accounts for each one, but don't want to be eaten alive by the monthly fees. Any ideas?

I couldn't agree more with having multiple accounts. I currently have 3 checking accounts and 9 savings accounts. I have an account for auto maintenance, home maintenance, Insurance, tags and taxes, clothing, medical, gifts, etc. Basically anything that accumulates for any amount of time. I love that I get paid interest to have these accounts. I keep track of everything in an excel document.

This post was amazing. My husband and I counsel couples and money tends to be a big problem for most and I could never figure out away to explain it well. We are the 1 checking and 1 savings account (not including my daughters account) family and budget very well but this plan seems to work well for all types of people. Thank you for sharing your wisdom and I will be recommending this post.

We use ING-Direct in conjunction with Chase, and setting up new accounts is a snap! Our checks are deposited to our joint checking account at Chase and I've set up a schedule for funds to be dispersed to the other accounts usually a few days after each paycheck. We have accounts for our real estate taxes and hubby is an independent contractor, so we put aside some of his money each pay period for that. We have separate accounts for vacation planning, holiday gifts (a few dollars a paycheck goes unmissed, but it gives us a budget to spend for our holiday gifts, plus it hurts less when the credit card bills roll in!), a personal spending account for each of us, and a joint checking account where we pay our normal bills from. We also have our emergency funds, as well as "rainy day" money because my husband's pay periods vary more than mine. It's so easy to set up new accounts that when my husband decided to go back to school for an additional certificate, I immediately juggled things and set up a new account so we can hopefully pay for the whole thing up front and save 15%!

It works a lot better for us to be able to track everything separately, and we do use Mint.com to do so. We also use credit cards with rewards, so some of our annual rewards go to giftcards for weddings, showers, or Christmas grab-bags. We love our system, and it's really easy to tweak, too!

She includes things like toiletries, etc., not just food.
“This includes food, toiletries, baby needs, pet needs…basically anything you could find at a typical neighborhood grocery store.”
So like, toilet paper would count. Anything you buy at walmart would count.

@ Melissa. Yes, there are only two people in my family, and we spend $400 a month in the category!! I am assuming that once you get more people, the budget doesn’t exponentially increase with each person. Like, I don’t think it would cost that much more to feed one more person or have one more pet.
But I eat super healthy food, so I don’t cut corners or eat anything cheap, so I’m sure I pay a lot more than most people do for groceries and vitamins.

Opening bank accounts has nothing to do with your credit unless the account goes negative and the bank closes the account. Then the bank will turn the account over to a collection agency who may then put it on your credit. Banks do not check your credit to open an account. They check chexsystems. It is like a credit check except it only tells the bank if you have had bad bank accounts in the past. If you do not have any bad bank accounts or have taken care of any that may have been bad them you will not be on chexsystems.

I mean this is a good idea, don't get me wrong but, I have to say your descriptions of the wife's v the husband's account usage is terrible. Obviously it's just a guideline but it's absolutely crappy the way the funds "should be" distributed.

Hah! I seized up when I read that. My husband told me to keep an open mind. But when the Wife’s account listed everything for the family and the husband’s account listed hair cuts and golf, I had to balk. I am glad someone else saw that as concerning.

Thanks for the feedback! As mentioned in the post, that’s simply showing what works for our family. Of course you’ll need to change it around to work for your family! It’s just the concept of allowing each other the opportunity to have complete independence and autonomy, which really helps the family unit work better. Best of luck with it, let me know if you have any questions!

I love this idea but I am confused on the WIFE vs the Hubby acct. Why does she pay piano and school fees while he is only responsible for his own fun like golf? I work but only part time so my hubs considers me a "stay at home" mom. Do I get less money in my acct because I bring in less but still am responsible for kids expenses because I "stay home" while he gets "fun" money? I'd rather each of us have "fun" accounts and then create a separate acct to cover kids expenses like school pics and sports/lessons. Would that work?

Haha ok, ok, ok, everyone, really? The husband and wife account description EXAMPLES are upsetting you? Let's not get so fired up about the unimportant details here. I'm sure we're all adult enough to realize that every family will need to cater the husband and wife list to THEIR family needs, THEIR way of doing things, and whatever works best for THEM.

Not that it should need explaining, but I'm going to cover my bases here. My husband runs his own business, full-time, in an office outside of the home. He works full-time, I am a stay-at-home mom. So obviously in MY FAMILY I would be the one to drive the kids to piano and school (thus, I would be the one to write the checks), activities, play dates, go shopping for them, etc…and we have decided in my family that my husband takes care of all the car items (oil changes, tire rotations, getting them cleaned, etc.) and I do all the cooking and grocery shopping. My budget is $600+, his is about $100. So, really, in my family, I am the one with more money to play with! Trust me, I am able to go to lunch with girlfriends and buy myself a new purse FAR more often than he is able to pay for a round of golf.

But really, it's so unnecessary to get fired up about male/female roles! If that's all you take from this post, then you might want to look inward a little and see if you're sweating the small stuff in life a little too much. Feel free to give the husband and wife accounts equal amount of money if you want! That's great! All I'm saying is that it makes so much more sense for each spouse to have their OWN account and OWN budget, so they can spend how THEY want. The IMPORTANT information you should be taking away from this post is that EACH spouse, regardless of how much they usually spend, needs a budget. Then, you need to sit down as a family and decide what responsibilities each person is "in charge of" for the month to make sure you're allocating enough. Then, take it from there!

So, please, enough with the male/female role comments, they are really unnecessary. I definitely value your opinions and feel free to leave constructive comments as often as you'd like! But the gender role debate should definitely be saved for a different blog.

Haha no no no, I think you're reading too much into my "examples". Do what works best for your family! And please, just because you pay for piano doesn't mean you shouldn't get fun money too! Isn't that a given? YOU spend your budget how YOU'D like. See my comment below for better details, but really, you just do what works for your family.

This is very intriguing to me but my husband and I use our credit card with points rewards for all of our expenses and pay it off every month. I definitely think we tend to overspend so I like how your system offers more budget control but I'm curious to hear your advice on how to incorporate the extra element of our points CC.

I totally agree with your concept, but I do it with 2 accounts and have an excel spreadsheet that divides everything up into very similar categories. No need for all the accounts. We've been married 7 1/2 years, live on one income, put every expense on a credit card to earn airline miles and have never paid one dime in interest. Different things work for different families.

Totally agree. Having a bunch of accounts is excessive, confusing, and unnecessary. It just makes too much to manage. Dividing the one account into categories allows you to easily split up the money in whatever ways you need. Plus then your working off the “budget” instead of whats in the “account”. I like YNAB for this.

Just a correction on the Health Savings accounts, it is a requirement that you have a high deductible insurance plan in order to open this type of account. Don't want people getting in to trouble with the IRS as I am a banker & an accountant that has seen people getting large fines for such activity!!

Our family has been doing this for 6+ years and wouldn't have it any other way! We have checking accounts for all five kids too! We do everything online….it's so easy. I see all my accounts at one time and what the status is. If one of us is out and needs money we can just transfer over. So easy!!!!!

This sounds like a great plan! HOWEVER…. I have a problem with it…. my husband. He is so old school, he refuses to do his banking online. Ironically, he works for a large online banking company & is the head of their High Risk Collections department, so his excuse is that he sees too many issues with people having their information stolen, etc.

He is also, as many men are, very set in his ways. For example: we can have $14,000 in our checking account, but he still will sit down on the 1st & the 15th of the month and pay the bills – by good old fashioned checks, stamps & envelopes. Don't get me wrong, I am very thankful that he is so anal about our money & credit. He is meticulous about it & because of that, we have outstanding credit. BUT – we have 4 kids (15, 14, 11, 9) and, in my opinion, we really need to start some kind of savings account for them. Our oldest child goes to a military academy, so that takes a good chunk of the income there – but I think that just makes it all the more important to do this 7 account thing and stick to some kind of budget.

How I can convince my husband to get on board with online banking? I have told him how safe it is, my parents have told him, his friends, you name it but he just is very wary. Any suggestions would be greatly appreciated!

I agree with almost everything you have listed above. I got my husband on a budget plan probably 3 years before we got married. He hated it at the time and didn't understand why he needed so many accounts. He didn't understand how he was going to be able to keep up with all of them while working shift work with the police department and selling real estate while also going out on the boat and having dinner parties all the time. Even more reason to need to really good budget. We actually have 5-6 accounts EACH.
1&2. We each have a savings account that a portion of our check goes to each pay period.
3&4. We each have a spending account which we have a certain amount to into each pay period for gas, food, and other stuff (hair cuts, etc).
5&6. We each have a monthly bills account from which our monthly bills are drafted. Each pay check a half of our estimated monthly bills amount goes into this account. When the bills come due, the money is ready and waiting.
7&8. We each have a yearly bills account. (This is the one I feel like you forgot!) Each pay period a certain amount goes into this account. I calculated all of our yearly bills and divided them by 24 to know how much from each check we needed to allocate. This way, when our car insurance or house taxes, car taxes come due, it is ready to be paid and we do not have to live check to check!
9. Our "Family checking" is actually called the "Dump Account" out pay check is direct deposited and any other cash we have gotten, including rent from rental units etc. I have it set so that every other Friday, all expenses get transferred from this account to their correct place in the other accounts.
10. Our "Slush Fund" is a play fund. We believe we need to play a certain portion of what we work. So we put a portion of our extra money, from the Dump Account" once all transfers have been done, into this account.
11&12. We also both own rental units so we have an account for each of those to ensure that those bills are being accounted for but not being included in our monthly "need to survive" budget.
We don't have children yet so that cuts out the kids account as for right now. I actually have all of this in an excel spreadsheet that we revisit each time the yearly bills come due to make sure we are budgeting correctly. We also revisit when we have an income change to adjust for more savings or play. It really is easy to handle once it is set-up. It does take some time and brain power to get it set-up though. Guess it is not for everyone.

I love this idea! Being able to transfer online is great! We are already doing something similar to this. We have a regular savings… very small! Escrow (we take care of our own taxes and insurance), E-fund, and missionary Fund (7 young kids of which five are boys!) I just wish that we could put more than $5 here or there… The belt is so tight sometimes that some of the accounts have to go empty! I guess the old advice of learning to manage money before it manages you will never go out of date! I guess the habits will be formed and then someday we can add more to it… I hope! Thanks for the great advice!

I think you are making this too difficult. Having a checking account for husband, wife, household AND fun money? Those should all be lumped together. They can be tracked separately in a program like YNAB, which is what I use. Try it out, it makes the need for all the different accounts unnecessary. I do still have a separate emergency fund, a separate account for our rental, one for our child and one for my husbands races that he is reimbursed for. Other than that, they all come out of the same account.

There is a great little visual presentation online done by an investment group who were trying to help their clients to manage their monthly cash flow better, so that the clients had more money to invest for long term goals. (I am not affiliated with this group in any way–just think it is a very helpful presentation.) Look at firststepcashmanagement.com. The simple, minutes-long presentation really helps to visualize some of the ideas that Jordan is getting at. Jordan's system is more complex, but it is just an adaptation of this helpful, basic idea.

One thing the first step cash management folks advocate that I find VERY helpful: Instead of the base family checking account transferring MONTHLY into the expense accounts (what Jordan calls husband/wife accounts), the transfers go in WEEKLY. Their point is that almost everyone can manage one week, even if they are not good at tracking their money. And, many expenses, like groceries, are done on a weekly basis. Weeks are easy chunks to think about, while months are longer and do not divide into even weeks. Within a week, people can more easily remember what they have spent already. And, almost anyone can wait a few more days until the beginning of the week for their next transfer, to buy something they may feel they need.

In this day of easy, automatic bank transfers, this becomes easy to set up. Take your monthly amount for flexible expenses (groceries, entertainment, etc), multiply by 12, then divide by 52. Have that amount go into your expense account weekly.

Here is a very simple example:

Our oldest child has just started college, and we helped her set up her accounts this way. She has a savings account with some "emergency money" in it, plus two checking accounts. We call them her "base checking account" and her "working account." She uses her savings for the big irregular expenses like books. She uses the base checking account for her regular bills (cell phone), which are paid automatically. Then every week, her base account transfers her WEEKLY spending amount into her "working account." With so many stresses from all angles that first year of college, we knew she might have trouble with a complicated budget. So she has this weekly amount she can spend on groceries and anything else. The money comes in every week, so she can wait if she needs to a few days. If she sticks to this amount, then she knows everything is OK for meeting her long-term needs for the college year.

Our bank also lets you set up notifications, so she gets an email if her balance goes below $20, and she also gets an email letting her know when her new money arrives in her account each week. So helpful. This would work for any of us adults, even the most budget-impaired.

Finally, Jordan–did you forget to include an account for retirement savings? This is not at a bank, usually, and you were probably just listing bank accounts. But for people trying to allocate their money, a reminder of those very important retirement savings might be good.

My husband and I were constantly battling budget problems until we did something similar to this about 2 years ago–not only has it saved us money, it has saved our marriage! 🙂 With my own checking account, I feel like I have the freedom to spend/save as I please, as long as it is within the budget, and I don't have to worry about him withdrawing money from an ATM and not knowing about it–it has been wonderful! Because of this, I have been more motivated to save and have been able to send my kids on choir trips from our "slush fund" without having to dip into savings. It feels awesome to be in control!!!

My husband and I have been looking for something JUST LIKE THIS to help us get out budgeting under control. I stumbled on your website this morning and not only have pages in my notes book of notes I jotted down, but cant stop reading…
I do have a question about the Family Emergeny Savings. You said that you recommend an online bank like ING or ETrade… I cant see on their website a way to set up a regular savings. Did you set it up as a Checking account or maybe as a Retirement account?

I LOVED this post! This is very similar to what our family has done for many years. Except the husband wife checking. I love the concept but since I take care of all the finances and my husband just takes out his "budgeted" amount in cash each month I'm not sure if it would be necessary for us. I am a stay at home mom of 4 and last year my husband found his position at work eliminated and was unemployed for 7 months. Thankfully we had our long term saving (a years worth or income) in place and were able to go about our daily lives in relative comfort as he looked for a job and continued some educational certification. We were even able to buy him a new commuter car with CASH when his new job required significant travel. Now that he is working again we are rebuilding that long term account.

Agree here. Why is the husband's account full of fun "for him" stuff and the wife's all groceries and dog food and noise? I know you have oil changes listed there for the husband, but still. Shouldn't groceries be a family expensive since it's for the entire family? And this: "If she runs out of money before the end of the month, she needs to go without and spend more wisely next month" is not cool. Very 50s/Lucy Ricardo/"here's your allowance little lady." >_>

"it's so unnecessary to get fired up about male/female roles."
^ In a world where women have been treated as inferiors for years and years, it's really not unnecessary. Several people were offended/concerned about your wording, so it's obviously not an isolated issue. On the topic of the 7 accounts, if you care enough about each other to get married, a couple should have a joint account and be able to trust each other to act as grown-ups and use the money wisely. Dividing money is dividing a marriage, IMO.

I’d bet this poster is NOT married. I personally found NO problem with this ‘wording’. I think those who were offended have self-esteem issues for sure.

We have been married for 13 years. We are a one-income family ( I am a SAHM) and Jordan’s description makes PERFECT sense to me. We have always been on a tight budget to make our lifestyle work for us, and to allow me (and my husband) to raise our kids, instead of sending them off to daycare for someone else to raise.

Sometimes, I would just love to buy something silly, without having to justify the purchase! If I have extra $$$ in MY own account, then why don’t I have the right to do that? Same with my husband…..he has the right as an individual to spend his EXTRA money on a new golf club without me questioning the purchase when we do our monthly budget.

We currently have 1 savings and 1 checking. We are going to open 5 more accounts next week. Thank you Jordan. This plan is brilliant…..and will offer so much more financial control (and freedom!).

Before my husband and I met we each had accounts at credit unions in co. When married we knew we would be in UT for a while so we decided to open new accounts at Wells Fargo, because its a bigger bank and it would be easier to access anywhere we went than the Credit Unions. However, we decided to keep the credit union accounts open too. This has been a major blessing for us. We know live in Nevada and use those Credit Union accounts as emergency savings accounts. Because they are banks that don't have branches near by it is really easy to forget about the accounts. We direct deposit money straight from the pay checks and they money just builds up. We recently bought a new house and for some interesting reasons we needed to open up an extra checking and savings account. Although we no longer need those accounts for the reason we opened them we decided we could use the extra checking account to pay our mortgage. We direct deposit just enough money from the pay check to pay the mortgage. Well we were doing this until we got slapped with some major hidden fees. So we are closing the checking account and only keeping the savings account. The mortgage money will go straight into the extra savings account now. Either way, having the extra account for the mortgage is nice because our budget is tight . The money is separate and wont accidentally get spent if I forget to record something in my ledger or an energy bill is higher than expected. We also have an HSA through Hubby's work and it really has been a great thing. The budget is tight, but we don't have to worry about haw we can afford unexpected doctors visits. Anyway, as I see it managing extra accounts especially with different banks can be a little frustrating, but it really does help me manage my money better and it's worth it to know that all of my bills will get paid. I second your advice.
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Great question! My husband and I set up those accounts YEARS ago, back when ING specifically was tossing cash at anyone who would sign up with them. Well, things have changed (as we all know…) so these two banks may not be what they used to be (but they still work great for us because we've been there forever). My husband is the one that set up those accounts, I forwarded your question to him and this was his reply:

"It's not that we necessarily recommend those specific sites, ING actually got bought (if I've heard right), and with E*trade you have to have brokerage account, which means you have to have stock somewhere.
So have her look at Ally, or really, any separate bank from her current other accounts. The purpose is to not see it every time you log in to do your normal banking. And a perk would be that it has a good interest rate, but they change so often these days. Hope that helps!"

Crazy question probably but how are the different accounts used to pay for the variety of items they are set up for? Do you have 7 different debit cards you are juggling or 7 checkbooks? I am probably making this too difficult but can't see how it works. We currently use the envelope, cash system and like it but having that much cash on hand does make me nervous. Thanks for your help!

I love this concept and have been using the three separate checking accounts since day 1 with my husband. We have his, hers, and ours. Since our mortgage doesn't include escrow, we also have a separate savings account for that. I also like keeping my savings with ING, that way I don't see it on any regular basis.

My husband and I have four bank accounts: emergency savings, savings, family checking, and my checking. We also take out cash for fun money and my husband's money. It really works! After reading this post, I think we really need to add an HSA account, and then we'll be set!
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My husband is self-employeed and his income is always so different, and its REALLY hard for us to budget and stick to it.. He will be wprking part time for a ski resort this winter–so we will have some money coming in from him. Has anyone used this,that has an income that is never the same?

Good ideas! One thing you need to be aware of, though (coming from someone who works at a bank), is that not everyone is eligible for an HSA account. You can only have a real HSA account if you truly have a high deductible insurance plan. HOWEVER, you could still open a regular savings account and treat it like an HSA by saving for medical expenses there. Also, children are not eligible to open checking accounts in most banks until they are teenagers.

Yup…US! My husband is self-employed too, and his income is volatile. That's why we do it this way! Recently my husband had to take a 40% pay cut. Yes, almost HALF of our monthly income. Luckily we were living below our means so it didn't affect our ability to pay bills in the month, it just cut our fun money down, and cut dramatically how much we are able to put into savings. When the pay cut first hit we stopped putting money into savings until we got a handle on things. Now, a few months later, we are able to put a LITTLE (and I mean a little!) into savings each month, but it's not nearly as much as it was before. You need to learn to live off of one income. Do you work? You just need to keep your living expenses to a point where, no matter what his paycheck is each month, you can pay your bills. If he can't do it alone, you should get a job. If that doesn't work, he might just need to consider getting an employer in order to take home a steady income. You just need to do what's best for your family. This winter you should put away 100% of his ski resort income. Pretend it doesn't exist. You need to live off of his self-employed income and put the rest away, to protect your family in case he goes without pay for a time. For more questions on how to do this contact my director of marketing, Lindsay, and she can set you up with one-on-one consulting with me. Lindsay@funcheaporfree.com Hope that helps!

Sara – your situation is very different, you don't need most of these 7 bank accounts. I would just have a checking and a savings account until you are married with kids and an occupation. You should still try to set and keep a budget (decide how much you need for groceries per week, and how much "other" money you need per week) and anything leftover put into savings. Trust me, you'll need it when you get out of college 🙂 Good luck!

I am unmarried without children (I work full time and am also a student) and I have implemented this method in my life with 6 accounts. I have 2 checking accounts. My main checking account my payroll check is direct deposited every 2 weeks. All of my daily living expenses (groceries, personal care, etc) come from here and I have a budget set up on mint.com. My second checking account is for school needs only. Grants and scholarship money gets put into this account and it pays for books, tuition, supplies and things of that nature. I have 4 different types of savings accounts. The first account is an online savings account that has a monthly auto transfer from my main checking account. This account is my emergency fund. The other three savings accounts are all at the same bank as my checking so its very easy to manage. I have one savings account set up as a travel account to save for vacations. Another is a savings account for saving for a downpayment on a new car. The third savings account is a rainy day account. All of these are set up with auto transfers every month. I love my system. With all of the auto transfers I hardly even notice the missing money every month and then I get to see a growing balance in all of the savings accounts. I monitor my budget closely through mint and learn from the previous month to make the next month better! Thanks for the inspiration.

Serena – there are a few options for you. First of all, you shouldn't have ANY bank fees. As long as you are staying on top of your bills your bank shouldn't be charging you for anything. If they are, change banks! Like, NOW! My husband and I lived paycheck to paycheck for YEARS (read my story here: http://www.funcheaporfree.com/2011/04/we-have-big…. It was scary. But you know what? These 7 bank accounts are part of what pulled us out of our bad situation. It forced us to live within our means, tuck a little into savings when possible, and account for every dime that came in. If you are living paycheck to paycheck and not quite cutting it each month, you'll need to find alternative ways to make extra money. I don't know your situation so please only take this advice as suggestions in hoping to help you guys out! But maybe babysit out of your home/open a daycare, tutor kids, pick up a part-time job (if you have kids, maybe find a night job like waitressing), heck, walk dogs if you have to! Living P-to-P is scary…trust me, I know. But we were able to get creative and bring in just enough to help us ride through the tough times. I hope that helps in any way! But just understand that dividing up your money each month will help you stick to a budget and save easier…I PROMISE. Good luck!

How do you find a bank that doesn’t charge a monthly account fee? I pay $14.95/month/account so I have been using only one chequeing account and a government savings account which does not have any fees. I’m in Canada if that makes a difference.

Nope! No juggling, it's really simple. One debit card, two credit cards (my Costco card that pays for MY expenses in the month, and a family credit card). That's it! The only accounts we spend money out of are:
1) Family checking (we put family expenses on the family credit card and draft money from this account to pay off the card each month),
2) His checking (same – he uses the credit card and we pay it off with the money in Husband Checking account…he does have a checkbook but rarely uses it), and
3) Hers checking (I use my Amex and pay it off with Wife Checking account money…I use my checkbook occasionally for lessons, school, and babysitting)
You have to understand that everything is done digitally any more, so there's really no juggling at all. It's pretty simple. Money is automatically drafted into our two savings accounts and our HSA account, and automatically drafted into HIS, HERS, and FAMILY CHECKING. From there we just pay off our cards at the end of the month and that's it. Any leftover money we manually draft into SLUSH FUND.

Ok I left a long comment at the bottom, but then saw this response. So if husband uses same credit card as family expenses do you just go through the transactions at the end of the month to figure out which account (his or family) to pay from? Sorry I’m asking so many questions, I just want to totally understand everything. I wish I could sit down with you and grill you. Haha.

We do it a little differently, but we do love having multiple accounts. There's one for our emergency fund, one for "big things" (like a house down payment or new car or whatever we're working towards), one for vacations, one for (hopefully) future baby-related things, one for tuition, etc. It's nice, because we can go on vacation and not worry about how much things cost, because we know that we have money to cover it. (Or that we can't do something because we don't have the money.) It has really helped my spender husband become more of a saver.

I saw that I have the same question as C.R. and that is if most of my expenses are paid with my credit card and my husband and I both use the same credit card to accrue rewards, at the end of the month how do you pay your cc bill? We pay it off entirely each month but some of it would be for his stuff, some mine, some groceries, etc. How do you do that with multiple accounts?

Have you ever looked at PNC's Virtual Wallet? It basically splits your accounts into as many folders/areas as you want. They are labeled and separated and you can track how much you have in each account and how close you are to goals. I have all of these accounts you mentioned and use them in the exact same way you described but all in one account. Check it out! It's amazing!

I am new to reading your blog. I found this article interesting because I just recently got married and I have 5 accounts and my husband thought I was crazy and not able to keep track of all these accounts. He keeps trying to convince me to join all the accounts but I can't bring myself to do this. I have several savings accounts that I deposit money in each paycheck and then don't ever touch them or look at them again. I had always wanted to do a study abroad program in school and figured the summer before I got married would be the perfect time to complete a dream. Luckily I had well over enough to buy a ticket, pay for the program, buy all new camera equipment, take off work for 6 weeks and travel all over Europe before I got married. I didn't really budget money on my trip because I wanted to enjoy it and spend as I pleased. This trip didn't even effect my normal bills being paid or anything. I will NEVER go back to having just 2 accounts. Having accounts that I don't touch much allowed this dream to come true and think more people should try it as well.

Yes, great question! In my family we have two different credit cards. I have my Amex card and only gets used for my budgeted items, so it gets paid off from my checking account. My husband also has this card, but it's in his name. So if I say, "Hey honey will you swing by the store and grab some milk on your way home" he uses the Amex card so it counts out of my grocery budget, but it shows that HE'S the one that purchased it on our bank statement which keeps things clear and accurate.
My husband hardly spends anything in the month (in our family, anyway) so he uses the "family credit card" and we just use his budget toward that card each month. His version of the family CC is in his name, so just like the example above, we can immediately pull all purchases done by HIM with HIS card easily.
In your case if you both use the same card then it might be a bit harder to track your individual spending, but otherwise it's no big deal. You'll just have to go back each month and see how you did and try to stay on top of it. For us, we can look and see exactly how much I've spent in the month in one glance by looking at my CC balance (which is helpful because my budget is WAAAAAAAY bigger than his), and for him, we can see how much he's spent on "his" family card on our statement pretty easily.
But, like I said, you just need to do what works for you! Hope that helps!

Thanks for the post, my husband and I are recently married, just bought a new house and have a baby on the way. We definitely are going to be trying out this system or at least a version of it. We don't have a ton leftover at the end of every month, and we both work full time. Out of curiosity, can you share an approximate annual income. My husband is afraid we dont make enough to have so many accounts. I am under the impression that it will work on our incomes because it is all based exactly on what is going out. Thanks for your blog, so helpful!

I don't see any contrary opinions, so I figure you're deleting them, but I'll throw this out there anyway: this is a lot of hassle (keeping up with 7+ accounts, usernames, passwords, security questions, etc) that is all solvable with the simple concept of controlling your spending.I mean really, is it that hard people?

No, I haven't deleted any at all – we just haven't had any so thanks for sharing your opinion! It's actually not a hassle at all, which is probably why people haven't mentioned it being so. We do all of our banking through Chase, except for our family emergency savings (which we never even touch anyway). So we only have to log into chase, and we can see everything on one dashboard. Additionally, we use mint.com and any additional accounts, loans, credit cards, etc. (we can even pay bills from Mint) all get pulled into one place there. So we only need ONE password for mint, or ONE password for Chase in order to do our monthly budgeting/bill paying. If you try it you'll see for yourself, but thanks again for your opinion!

These are great ideas, unfortunately, you lost credibility when you pronounced ING. as "-ing". It is an acronym for International Netherlands Group, not the suffex of a verb. I would also go a step further in your 7 accounts and break out the Grocery account out of the wife account. We love having the grocery/household account separate from our regular his/her checking accounts.

I wanted to just pipe up here and say that for some people it IS VERY hard to control their spending. I am one of those people. To have my money so compartmentalised would be a fabulous way for me to LEARN how to control my spending. I imagine you are quite good with your money and I envy you for that. I know there are other things that I find easy in my life that others find quite difficult. I guess it's just all about personality. I am constantly asking myself the same question… How hard IS it to control my spending?? what is wrong with me? I am definitely grateful to people like Jordan who are willing to give me the tools to learn how to be like people like you.

Hi Jordan, I just wanted to give you a little comment love and say that I've arrived at your post via Pinterest. I've been feeling quite defeated about budgeting recently. But since reading your post I've felt better about our finances and have since signed up to an almost Australian equivalent of mint.com. I feel in control of our finances for the first time in six years. I live in Australia and so had to do a little research to find something similar to mint.com. One of the major banks here (anz.com.au) offers a MoneyManager service that I have (so far) found VERY worthwhile. If you wanted to reach out to your Australian audience I would highly recommend ANZ MoneyManager. Thanks again for the in depth post.

I must be grocery shopping wrong because we would be eating beans and rice only if we spent $100 per family member per month—(slight exaggeration but still) We live in Texas (relatively affordable here to eat in the home) and it is closer to $150-200 per family member per month–and we don't have extra processed foods or unnecessary food items like snacks (apples and bananas and grapefruits when on sale) we don't eat meat (too expensive!) and I use very FEW convenience foods (occasionally open a can of beans rather than making them from dry goods) so exactly HOW are you people eating so cheaply? Unless all you eat is cheap junk? (rice, potatoes, and iceberg lettuce?)

Wow Helen, thank you for your kind comment! They are always appreciated more than you know. Thanks for the tips, I'm not familiar with…well…anything in Australia, so thanks for passing along the info 🙂 Hope you have a wonderful day!

I like your ideas here and my husband and I are trying to put a similar plan into place with a few changes. Instead of a slush fund we are setting up an IRA bc neither of us has retirement benefits with our jobs. Also we are combining the husband and wife checking bc I spend more of the weekly budget than he does so he really only needs gas money during the week. I'm curious how your family fits retirement planning into your monthly budget or financial plan.

I agree wholeheartedly with this method! My husband and I have had multiple accounts for many years now and it helps us focus on the main issue at hand: our spending. After reading your post, I have decided to make a few changes about how we are doing things. First: Our emergency savings and regular savings are one-in-the-same. Typically, if we have an absolute emergency, we have tapped into our 401K. This has happened only once – when my husband was laid off but I would like to have a plan in place to first use up regular savings, then emergency savings before relying on the 401K.
Second: I think we should increase the amount going into my husband's account to include things such as date night. 😉
As of right now, his account covers his dry cleaning, lunch, haircuts and fuel for his car. I usually shop for his clothing.
I will probably make changes to my account as well. My children's school lunches are automatically charged to my account when it reaches a low threshold. I will probably remove that automatic payment and remind them that when their lunch account reaches zero for the month, they will have to take sack lunches from home. Hopefully, they will learn how to budget their own lunch money and think twice about buying that extra Silk milk or bottle of water.
One thing that is difficult about my account is that it covers spending for myself as well as the kids. If I only have a certain amount left for the month and I have to choose between spending it on myself or them, I will always choose them. Even if that means waiting on that much-needed hair cut or not buying those boots because the new season of sports is starting soon and registration fees are due. Similarly, my husband struggles with the same thing. He usually prefers spending on us instead of himself.
The HSA account is a lifesaver! I love it! I don't cringe when receiving bills from the pediatrician's office any more!
Regarding the Slush Fund: Our fun money comes from a savings account which our bank offers called "Keep the Change". They round up every purchase you make on your debit card to the nearest dollar. The difference automatically goes into your savings. We didn't touch it for a while and made a few deposits here and there. Before we knew it, we had $1200. Our at-home piggy bank money also goes into this account. We used it as spending money on our recent vacation to Europe.
A warning about automatic bill payments from your family checking: If you have a bill that is not paid automatically, you are bound to forget about it once or twice. It happens. Then the lawn service guy comes knocking on your door. It's a little embarrassing.
Finally, one thing that interests me is your recommendation to spending $100 per person per month on groceries. That is a struggle for us. We have greatly reduced the number of days we dine out, and our trips to a certain chicken sandwich place is so infrequent, I now realize how bad their nuggets taste without their famous sauce. The groceries, though. That's a tough one…

The accounts that my husband and I have are joint accounts. They belong to both of us. We are not dividing the money. All of the money is OURS and we both have access to all accounts. We just like using separate accounts for daily spending because I usually have a better idea of what money is needed in the near future, especially when it comes to kid-related expenses. When we only had one spending account, he could look online to see what the balance was but never knew if I had a plan for that money already, so he used to call me before every big purchase. It almost felt like he was asking my permission to buy things. That seems pathetic. We would never want each other to feel that way.

$100 per person per month on groceries? You guys have to be either eating Ramen Noodles or eating out a ton. There is no way you could be feeding your family a diet full of produce and other healthy things on that type of budget. Unless SLC is really that cheap?

Where do you consider investing? A good friend of mine who is really smart with money told me to invest or save 10% of what I make a year. Could investing in Edward Jones be a "Family Emergency Savings" account?

I really love all your budgeting ideas. I want to implement this in my own expenses, but I just need some advice. I'm a college student and work as a server therefore I make all of my money based on tips. It is difficult to know how much money I'll be making from week to week since it's all based on how that day of work went.

I especially want to use your envelope idea, but do you have any tips on how I can create my spending budget?

Thank you for this post. I just found your blog on Pinterest talking about the 7 accounts and had to check it out. We are having such a hard time saving money for anything….. I needed this. I am going to discuss these ideas with my husband and try to make it happen for us. I hope we can make it work. Again THANK YOU!!

I am really hoping my husband will get on board with this! Brilliant. I have a question for you since the holidays are coming up, though. What do you do about gifts, both the monthly things that come up and the Christmas spending? Where does that money come from in your family?
Thanks very much!

Ooh that's a tough one. I remember how hard it was to budget in College. I'm in the process of writing a post that will talk about this exact thing, so stay tuned! 🙂 In the meantime…you need to know A) exactly how much your set expenses are for the month (rent, utilities, parking pass fees, etc.). B) you need to average out how much you need for groceries each month (for a single person, you could stay within $150-$200/mo if you cook and are wise about your shopping and shop at cheap places like Walmart), and C) give yourself a little wiggle room for \”fun\” money, gas money, going out with friends, etc. Make it realistic, but keep it conservative! There is your new budget.As for your job as a server, I totally get that. It's super hard. My husband's income varies sometimes too. Just average the last 3-6 months of income and \”plan\” low. If you average $1000/mo (for example), set your income at $800 in case you have a slow month, then set your budget around that. Your budget needs to fall within that income level or you 1) need to get another job, or 2) need to get a better paying job. If you make more than $800 that month, put into your bank account – you will probably need it if you have a really slow month! You always want to try to have a cushion of a few hundred dollars at all times (at least). Hope that helps!!Jordan

This is very similar to what my wife and I have, so it was interested to read. There are some differences. We have an emergency fund (for health costs, etc.) that we put about $150 in each month, an HSA for each of us, a joint checking account that we both use for all regular expenses (groceries, utilities, etc.), his and hers accounts that are 10% of our respective incomes that we can use for whatever we want (clothing, vacations, dining out, gadgets, etc.), and a couple savings accounts which we borrow from and replenish as we are able. It works quite well for us.

This might just be exactly what my family needs! I've been looking for a solution for two spouses who both struggle with financial disciplines. I just opened a second checking account for this reason, looks like I'll be opening a few more!

Jordan, I thought I shoul let you know that there are a bunch of photographers who are searching the web for people who are using their images illegally. You seem to be point the source of the images you use to other websites that have paid for the use of the images, while you obvioulsy have not since you are pointing as source to these other sites.
ALL images used on ANY website or in print are the intellectual property of the photographer and as such are copyrighted, illegal use of images created by another is a federal offence and is punishable by heavy fines.
If you wish to use the intellectual proerty of any photographer I suggest that you use a microstock agency such as Shutterstock which has many of the images you have used and are available for leagl use at reasonable prices for such things as your blog. http://www.shutterstock.com/pic-1219504/stock-pho…

We have multiple accounts for various things not necessarily how you have yours set up, but it works for us. Hubby just shakes his head as it baffles him and has said that if anything happens to him he will be back to one savings and one checking account. Well I handle the money, bills get paid on time and even though this has been a hard year, we have been saving. when he was on his own with his money, it wasn't unusual for him to be paying pate charges and also didn't look at the charges and one day I realized that he had been paying $40 a month membership fee for something he wasn't using and wouldn't again. Money goes further when you aren't paying late charges.

I think this is such a wonderful idea! My husband and I have been married for 10 year with 3 kids and we are still trying to budget our money. This might be the answer I think, and I am excited to get started. THANKS so much for sharing!!!

I'd like to second having free spending accounts for each spouse. It saves a lot of frustration and conflict. We each have the same amount added to our accounts on a regular basis. It makes him happy when he sees something he wants to be able to get it without having to justify it to anyone. I'm a saver too. I can save up for big things without worrying that my little nest egg will be dwindled away in the regular budget. I took my kids to the Olympics and it was soooo much fun.

Thank you! We are currently in the process of moving our money around and I have one checking account left to open. For us I definitely think that this is the best way to manage our money. After many years and failed attempts I think we are finally learning.

2 & 3- His Checking Account & Her Checking Account- we each get an allowance each week transferred to this account that we can spend on whatever we want, no questions asked. So for me, it's the $ I use to buy clothing and get my nails done once in awhile, while he uses it to buy lunch (since I always pack my lunch) and clothes.

Could you replace the Husband & Wife accts with like pre-paid cards instead of actual checking accts? Just curious b/c I really think having a separate acct/card for me would really help me keep my spending in check, not that I just blow money but I always end up spending a lot of money weekly on lunches so something like that would help me keep my budget in-line.

This seems a little extreme for me as a single girl in her 30s, but I do like the idea of having more accounts. It's made me think a little bit more about what I'm doing with the cash just sitting around in my savings account. Thanks for coming up with something to wake us up!
Right now my only method is to throw $1000 into my savings account whenever my checking happens to go over $3000, but I could start budgeting and probably save some more money. This has now made me think about how you didn't even touch the topic of investment accounts! I think I need professional help with that one.

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I actually have always had 6 accts and it makes my life so much easier (I currently use Quicken, but am looking at Mint)! I hadn't thought of separating Emergency savings and reg family savings, so thank you for that suggestion.
I do have one account that you hadn't mentioned and I thought I'd pass it along because it does help me. We have an Annual Expense Account that we have for what we spend on definite expenses throughout the year (Christmas gifts, birthday gifts and party costs, printer ink, car registration fees, etc.). We budget the amount we'll spend on all of those things, add them up and divide it by 12. Then every month put that amount into a separate acct that we pull from to reimburse the Family checking acct when we pay for one of those planned-for expenses. It has made Christmas and birthdays so much easier because I know we have the $ already set aside! Anyway, just a thought. Thanks again for your info! You're fabulous!

I'm about 5 minutes new to your blog and have been browsing a bit. I have developed many of the same techniques ( multiple accounts to track savings and spending, tracking spreadsheets,etc). I have been using the money jar system to disburse funds as they come in and be sure all bases were covered including fun money and savings. Between that and the multiple accounts it became cumbersome to reconcile multiple accounts but recently I found this new software that incorporates much of your technique but automates it all. ” target=”_blank”>http://Www.youneedabudget.com. Kicks mint.coms behind in the budgeting dept. one topic I haven't seen mentioned yet is the importance of setting aside funds to invest to create passive income. That is the only way to financial freedom. Just thought I would share and hope it's helpful to someone!

what can you suggest to a pre-paid debit card I just received in the mail. It cost $2.99-$3.95 to add money at a reloading center. $1.00 for credit transactions and $2.00 for debit. Is it helpful for SOMETHING? or should I just cancel it?

NO! You should never have to pay fees to use a debit card. Avoid at all costs, they are just trying to make money off of you! To pay for transactions and adding money is completely unnecessary. Just use a regular debit card and when they money's gone, it's gone!

She did say that the rules were the same for the wife and husband, I think it was easier to just not go into detail a second time. About running out of money… that's what a budget is. Of course nobody's going to let you go without anything for half a month if you overspend, but if there's no limits, you will never learn to save. I agree, most of these things are joint expenses, but I guess if I buy groceries, you can pay car upkeep. It's a trading game. I've never been quite comfortable thinking about a one-income family…I know there's truth to "what's mine is yours", but I personally feel more comfortable spending money that I worked for. How do you balance those thoughts, those of you who are doing the one income thing?

Cheryl, I have only two checking accounts (I'm working on paying off credit cards to start saving), one for major / pretty stable bills (mortgage, utilities, charitable donations, lawn care, credit cards) and the other for variable expenses. I have a set amount for the second account (via automatic deposit from my paycheck), and I keep a spreadsheet for all spending from that account. If I spend more than budgeted on one category, I have to pull it from another category. Some are ones spent only at intervals (car insurance, termite renewal, car ad valorem tax, Christmas, car maintenance), and I have a chance to save up for them with regular twice-monthly deposits, and others are spent on an ongoing basis (food/eating out, household, gifts, medical, gasoline, clothing, personal care, tickets, and music/books/magazines). Even though they are not in actual separate accounts, my spreadsheet separation has worked for me. Good luck!

I was surprised to see that savings accounts for children's college funds seemed to be an afterthought in this post. It came even after the "slush" fund, clearly education isn't valued. I also do not agree with having family/husband/wife checking accounts separate. I think that each adult can manage to keep their spending within their budget (all on one checking account) instead of getting their "allowance" to spend. Seems a bit over the top to me, and doesn't put too much faith in either husband's or wife's ability to manage their own budget. Also gives more opportunities for an account to be overdrawn if not careful. Also not much mention of retirement accounts. I did like the idea of the HSA, more should look into that.

With today's bank fees this may not be practical. Every one of these accounts is going to charge you a monthly fee. Some may waive it with a required auto transfer, but forgot about that transfer and you're looking at OD fees. Also you run the risk of grabbing the wrong check card or book and fudging things there too. Budgets are good, but it can be done without the labor and expense of multiple accounts

Overall I liked this post. Anything that actually goes into detail outlining how to budget, what to budget for and how you can go about doing it is great in my books. I used to use multiple bank accounts to control and monitor my spending but wanted to streamline. I wanted to create a zero-based budget (or envelope budget) that worked for me. I tried many programs both free and fee-based and settled on YNAB. I isn't cheap nor is it free but I highly recommend it. It takes the concept of budgeting and makes it so simple to get out of debt, plan for the future and see where your money is going on a monthly basis. Thanks again for an informative article on how your family handles the finances. For me, the structure is there its just in need of something more to put it all together.

I have been doing this for a few years. I have one local checking account, one online checking account, and several online savings accounts. The local account is for spending on groceries, gas, clothes, etc.. The online account gets the bulk of our pay automatically deposited into it. We then automatically pay all the bills and deposit into the savings accounts. We have savings accounts for home escrow, life and car insurance, kids, vacations, Christmas and a few others. I have found that it is so much easier to allocate a little money every payday for each large expense. I can pay annually for insurance and save more by paying up front. My kids sports are even cheaper when we pay up front instead of making payments. I have been following Dave Ramsey for a long time and using David Bach's "Automatic Millionaire" style as well. Great article. Thanks

How does this work if you take draws from your company. I.E. one month lots of work…next month not much work. I would assume you would have to monitor your accounts more often as you would have an additional account to manually divide amongst the 7 or how ever many. Also, we have a separate account for our rental properties…which has a bunch of savings in it. Do we need to mix that all in with these other accounts?

Hi! I've really enjoyed reading your money saving posts which I found via Pinterest. I have a question for you about Health Savings Accounts. (When I clicked on the links you provided they took me to the University of Utah Healthcare website and I wasn't sure where to go from there…) You mentioned that a family with small children or chronic health conditions may spend more out of pocket if using a HSA. Can you explain why? Our family has 2 (soon to be 3) small children, one of which has Down syndrome, so we go to the doctor a lot. I feel like having a HSA would help budget our medical expenses, but I'm curious why it might end up costing us more? Or maybe I read that part of your description incorrectly. I would appreciate any insight you might have. Thank you so much!

I like idea. I already have 1 checking and 3 savings. My question is how do you begin this when you're severly in debt and live paycheck to paycheck. I have a budget that looks great on paper and in theory, but my husband and I are both spenders and don't agree on how to pay down debt and save for our emergency fund.

I find this very interesting and it sounds like a great idea….but what about for the person that is a single parent? Would you just make it 6 accounts or would there be more thought involved? Surely not everyone will benefit from from the two spouse accounts. Thanks!

When we were first married and hubby didn't have a well paid job, we use to budget using coin bags allocated to certain expenses. Food, petrol, lotto, pocket money, etc and the bills came out of the cheque account. We were able to buy a new car, carpet and concrete flooring for our new home with this kind of budgeting. If the envelope was empty, we just had to be creative on meals until payday came around. When Hubby went onto monthly salary, it got even harder as we usually had no money for food by the end of the month (around the 15th of the month) but still managed it. He has been on monthly salary for over 20 years now (and 3 children later) and we still have been able to afford cars, holidays, buying rental properties but being hard on spending has been hard at times. Any budget is better than no budget as I try and teach my kids. We have 1 cheque account, 3 savings accounts and a Credit Card for food expenses which we pay off each month. It works for us. Many thanks for the help and advice for those that need some help in getting their finances under control.

this is no longer true!! I got in huge trouble with my credit union as they changed their policy to require $5 in the account at all times. Hands down I recommend CU's but ask questions or read the fine print 🙂

Jordan!! Thank you, thank you thank you!! I am finally moving out for good 🙂 on my own & have been looking for a simple way to budget (never stuck with any I've tried). And thanks to you I think I've found it. What I like most is that it doesn't require cash on hand. And I'm so excited about this I'll be sitting down with my parents to share it with them as well as my siblings at some point. So, from the entire Hosford family THANK YOU!!!

Really? We not only haven't ever been charged, but we got a flyer in the mail offering us $125 for opening an account. Each branch is different though, so if they aren't offering you a good deal, go to a different bank for sure!

Hello All!
I loved this blog post ! It really opened my eyes to a new way of managing my finances. I have a question though…. being a single mom on a limited income, would any of these %'s per account change at all with just one income ? Also, I am having a terrible time with over drafting every month. I know I'm lossing so much cash but I don't know what to do ! Please help if you have any advise !!

Hello! I am just starting to implement this idea with my family. And so far so good! Thank you for this!!! I have a couple of questions for you; 1. Where do you budget for car registration? 3. What about my own kids b-day gifts or parties? 3. Christmas? These extra, not always monthly costs, I am just not sure where to plan for them? Thanks again!

Yes, it can be hard. Trust me, my husband and I DON'T make that much money! We aren't able to put as much into savings as we once were (the life of a self-employed husband…income is always changing!). But keep in mind that my husband and I live off of one income (his) and have for the last 4+ years (we've only been married for 5.5!) We have simply learned to keep our living expenses pretty low so that regardless of how much or little we make, we live off of the same amount each month. If we make more money one month, the excess is then put into savings. It could be as little as a few dollars a month put into savings, depending on your situation. The goal is to continually find ways to live off of less, and *hopefully* find ways to make more money so that you can put more and more into savings each month (or put toward debt). Keep in mind that the percentages are ideal, and may not work for everyone; especially those living paycheck to paycheck. So yes, adjust accordingly, but really, try your hardest to keep the percentages in mind because it will give you the information you need to know how much you SHOULD be living off of each month ideally based on how much money you make. If you don't have enough, cut back your living expenses or get creative with ways to bring home a bigger paycheck each month. Over-drafting is the BIGGEST and FASTEST way to lose money! You must stop…NOW! You just have to get organized. If you need help, I offer one-on-one consulting services and can help you formulate a new budget and tracking system. Email Lindsay@funcheaporfree.com for info. Otherwise, you just need to live off of a cash budget if you need to (when it's gone, it's GONE. If you run out of gas, walk to work or take the bus!) and really focus on living within your means. Once again, it's mostly about being organized, and being disciplined. You can do it! I believe! 🙂

The best way to budget is write it down on paper before the month begins..you know where every penny is going!!! No questions!!!! It's much easier to allot the money and make cash pulls than use a million different accounts!!! Although this may work for some, it would definitely not work for me! I'd rather have a checking and savings and discipline myself to keep track! You have to do the same things with these obviously, but not near as many steps!!! Most people should add an 8th account too I guess..the Get out of debt account! haha

NO! It's not! Because if it was the same way, you wouldn't have Mom's fund and Dad's fund from separate accounts!!! You'd be big kids and stay on the same page together! You'd need a crazy big wallet for that many cards anyway! lol You don't take the envelopes you don't need with you, therefore you don't have to worry about losing them. You just have to be responsible! And in all reality…. Cash hurts! When you look down and see $50 left but you want this or that, it makes you realize just how much you have to stretch it! However if it's all on a card and you swipe here and there, there's alot more balancing to have to do!!!

Thank you for speaking up!!! I totally agree with you, the details are completely unimportant and are specific to each family's needs. You took the time to write out such a lengthy post and you are only trying to help by sharing what works for you. You shouldn't have to get such negative comments for only trying to help others! I don't think I would personally use the wife account for groceries, but that's just me and I didn't feel the need to bash you for saying you do that! Thanks for the post, I'm looking forward to implementing this system!

+1 for YNAB or "You need a budget"– it makes it a lot easier and helps you plan ahead for your money. What you are talking about isn't so much a budget as a basic guideline (which is nice) but it doesn't allow you to roll with the punches easily enough. You say everything is automated, but the problem comes in when someone is just starting off with their budgets and they don't have the 3-6 months' set up or the savings for the yearly expenditures. Where do they start? How do they deal with the unexpected?

This method also wastes a lot of interest. I hope some day interest rates will rise. By having savings spread out among so many accounts, you are losing out on compounding interest. $5000 in one account earns more interest than it will across many accounts.
My recent post Lord, The One You Love Is Sick

According to Gallup poll, children are 4 times more likely to FINISH college if they have a dedicated college fund savings account with between $1 to $499 dollars. People with children might want to consider this.

For a single parent, really, you would just adapt it however you feel it would work best for you. If it were me, I would eliminate the Husband Checking and would keep my \”Wife Checking\” and transfer my budget there each month. Simply because it makes it easier for me to track my budget and to see how much \”fun money\” I have leftover at the end of the month, without confusing my budget with the rest of the income/finances. But, honestly, you could probably get away with the 2 savings and 1 checking account with it being just you! Just try it out and see what works best for you 🙂

I read this topic you wrote via the Costco topic and I absolutely love it! My husband and I shop at Costco and I had no idea about the different memberships and that we could possibly be making money. We aren't big on credit cards so we would have to see if it would pan out for us at the end of the year! Also we have been working on budgeting and trying to start be savers and I really like the idea of opening more accounts and having money go directly into there. Thanks for the great tips!
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This may be a bit late, but online BANKING isn't usually what gets people in trouble. Banks have multiple security systems in place to protect account information. Where security risks usually happen are at processing centers where debit and credit card information is sent and at the merchants themselves. If your husband EVER uses a debit or credit card at ANY location he's at risk for that card to be stolen. It's rare for there to be a security breech at the online bank itself; most account compromises happen on the consumer's side of things.

I do not have a family or see myself having one anytime soon as I am nineteen ,but this is a great idea and from your bank account list and explanations I have benn able to devise my own smaller set if bank accounts to set up for one person. I will be writing them down and looking back over your list to see if I have missed any small details that I could add. Thank you for sharing this budgeting method it is valuable information for a lot of people and will help me to budget without doing it in my head and constantly reminding myself which can get frustrating even if I am food with numbers.

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I apologise for all of the spelling mistakes I sometimes hit the wrong key by accident as I am on an iPad whch is very sensitive to touch and autocorrect makes up the word that it thinks I am trying to type.

This is a great post! My husband and I currently have four main accounts that we use – a joint checking, individual check accounts, and a joint savings. I like the idea of two savings accounts, although that might have to wait awhile – we just bought a house, so our savings are low right now, and we're trying to pay off my car before doing anything else financially. My parents have been recommending an account/cash envelope like your slush fund, but at the moment we don't see the need for it. We don't have children, and we just use any extra money from checking each month to do anything "extra." The only main difference in how we use our accounts is that groceries etc. all come out of joint. Our personal accounts are just that – personal. I spend mine on clothes, haircuts, gifts, etc. My husband spends his primarily on video games (and gifts). But when our joint budget is tight, we both make sure to contribute from any money we have.

Great post and great concept, thank you for sharing! I do have a couple questions though and would like to know your opinion. What if you are still working on getting out of debt? Do you completely focus on getting out of debt, or do you still put a little in each account at the same time? Also, do you work on one savings account before working on the next? Or do you work on them both at the same time.
Thanks in advance for any response, I'm just trying to figure out the most practical way to go about this.

I definitely like this idea. It did sound dumb at first, but I'm all for it after reading through the logic. As for Ian, it's actually something that people who are using those four accounts and happy with their budgeting skills probably won't like, use or even need. For the rest of us who just write checks and pay bills and don't have a grip on what is going where, I think this is a great idea. Also with the kids, husband and wife all having their own accounts, nobody has to point fingers. The buck stops in a clearly defined location and the only person you have to point fingers at is the one in the mirror.

I believe your reason is good, but execution is off. Yes, some banks will give incentives to open an account, but is the amount worth it? Most banks are going to charge you fees if you don't have direct deposit or if you don't keep a minimum balance. I suggest two accounts – checking and savings. Use a spread sheet to separate you money into different "accounts." Entertainment, car, home, groceries, utilities, emergency, etc. This way, your money is in one or two places and easier to access in an emergency. We have the two accounts plus 529 accounts and savings accounts for each of our children.
Managing our money this way is easy and no fees.

Absolutely! You will simplify it quite a bit, of course. But you want 1. an emergency savings account, 2. a savings account, 3. a checking account (which would also be considered your \”wife checking\”, so eliminate that one), 4. an HSA if you can qualify, and you could even do a 5. slush fund if you want to set aside fun money…but that's not always necessary with just one of you.

Can I ask you one more question?….. If I set a budget for groceries for myself, say $150 per month, I assume this include toiletries and cleaning products too? And would I set a second budget for eating out or is it better to include "eating out/food monies" in the grocery fund… ? that's probably a dumb question but I'm
asking anyway! 🙂 🙂

I have been working on implementing your strategy here at our house and I think we are really going to love it! My husband and I went through Dave Ramsey's Financial Peace University class 3 years ago and loved it! We paid off all our credit cards (more than 15k) this past February and it felt so good! We have a long way to go though with student loans and a car we recently had to buy because my 14 year old van died. The one area we really struggled with was the cash system. It just wasn't working for us! I am terrible with cash and keeping up with it wasn't working for me. Plus, I had to make a special trip to the bank just to take the cash out and ask for specific denominations for each area. I hated it. So we never stuck to that but still struggled with putting money into savings and budgeting. When I read this article of yours it just spoke to mine and my husbands personalities SO much! He is very excited about starting to use all our accounts. I set up an online savings account and opened another checking account (we already had two because we were trying to use the second one as a gas card) so we now have the regular family checking and a his and hers checking. The only account we won't be getting for a while will be the HSA account. We don't have insurance at all and from what I have read, you have to be enrolled in a high deductible plan in order to get an HSA so I'll have to do some more digging into that.

I do have a question though: which account do you use for your gas? Do you use your checking account for gas for your car and your hubby uses his own account for his gas? Or do you take it out of the main family checking? We're trying to figure out what all will go under our personal checking accounts and that one kind of stumped me since you didn't specifically address it. I'm inclined to budget money for each of our accounts for gas and let me be responsible for my gas and let my husband be responsible for HIS gas. The other option is we are waiting to see if we were approved for a credit card through our bank that has a cash rewards system. If we get that card, that's what we will use for gas and groceries so we can earn the points. It will show up on our bank dash board and will make it very easy to pay it off each month by transferring money over to it from our checking account. I'm just curious how you two budget the gas. Thanks!

All money is "our" money. We are a one income family. I do make a little money randomly from babysitting my nephew, but most is his that becomes ours. It all goes into the same pot and distributed from there. We don't have "his" money and "my" money. It's one in the same. As far as the Wife account and the Husband account, I LOVE that idea. That way my Hubby can go get his coffee and donuts, which happens randomly and I don't have to worry about if he told me he spent that money and trying to keep track of his spending without screwing up the whole shmoe. 🙂 Makes distributing the money (for fun stuff and necessary items) fairly a lot easier.

Jordan, Thank you, Thank You!! I have been trying something similar to this that I made up myself … but your ideas are better and I will surely try them. I am fortunate to have a credit union that lets you open as many accounts as you want.. This credit union of mine only requires that one savings account have $25 in it. I really appreciate the different categories that you have made up…Smart! … I found something called 'PowerWallet ' and I am going to try it out.. I think it is free. Linda

Great question about gas! It comes out of our family account, because it's like utilities – there's no real way to budget for it. You can try to conserve as much as possible, but it is what it is – a necessity.

I've been trying to explain to my husband jutification for having a regular savings, an emergency fund and one for budgeted expenses (insurance, taxes, car maintenance and repairs, home maintenance and repairs, etc…) thanks for posting.

We have 8 accounts. Spending Account – family "blow money", Gas Account – all fuel purchases, Groceries – All food items, Bill Account – used to pay all bills, Larger Purchase Account – family fun savings (car, vacations, etc.), Emergency Fund Account – our 6 months living expenses, College savings – savings for our 3 children's college, and my favorite, Freedom account. The Freedom Account is the cost of all holidays, birthdays, car dedcutable, mother/father's day, oil changes, zoo/club memberships, anniversary and other planned yearly expensives totaled up and then divided by paycheck. We deposit that amount into the account every paycheck and then we always have the money needed for any of these. We know Christmas/Hanukah/etc. and Birthdays happen every year so plan for them!!

Jordan's "Wife Checking" covers all of her household products, dining out, etc., if I understand correctly. Be sure to watch the video on how she keeps track of her budget (the easy peasy envelope method). She explains it all there.

I couldn't believe the fact more with having several records. I currently have 3 verifying records and 9 benefits records. I have an account for auto servicing, servicing, Insurance, labels and taxation, outfits, medical, presents, etc. Generally anything that builds up for any period of time. I love that I get paid interest to have these records. I keep track of everything in an succeed papers.florida workers comp quotes

Thanks for clarifying, and great question! You just have to decide who is in charge of that "budget". In my family, that's under my budget because I'm the one buying those products. So it comes from my Wife account. You can see more about that here: http://www.funcheaporfree.com/2012/08/video-of-ho…

Great question! I will have to look into it by asking a professional to know for sure, but all I know from experience is that our credit IMPROVED vastly by doing this because it kept us from over-spending, kept our credit card balances in check, and helped us pay off debt and built up savings. We have great credit. But like I said, I'll look into it!

i am really really glad i found your website. me and my husband are just starting out financially (yay for graduating from college) and i was almost in tears the other day because all of this budget stuff is so overwhelming so thanks for all you post!

I'm curious as to what bank you use? I am currently wishing to open multiple accounts but the fees will end up costing me more that a CPA! What is the best bank to use to avoid phenomenal fees for each account.

Chances are is if the wife is spending money on lessons and such then more money is being put into her account. I don't believe they are getting the same set amount and hers is being spent on children's things. The point is her account is to store the money she uses to pay the things she is usually in charge of. She can also put her "Free" money in it. Because the father doesn't handle such expenses he most likely has less put into his account which balances out with what the wife has left after small expenses.

Is this not the same way Lady Ramsey does with cash in covers for each expense? I had always desired to use the embrace concept but I like using my examine cards. I don't bring a huge bag or pockets and the evelops could get thieved and then where would you be. This way it can be revealed and you don't reduce any cash. I like the concept and want to integrate it more. We have 2 benefits records and 2 verifying, one verifying is for expenses and one for groc, gas and what ever else. but one or 2 more verifying records for gas and groc would be excellent. thanks for the idea!!!

I'm feeling quite pleased to learn these seven bank accounts every family should need to have. In-fact I don't have some of those account, thus I'm looking forward to make those account to save my family and make life much organized. Thanks.

You don't need a credit score. The only reason you have a credit score is to allow you to go into debt because you have to have monthly payments instead of paying cash up front. A credit score is just a measure of how good you are at getting into debt and then paying it off. Wouldn't you rather have no debt and no interest rates making it so you paid more than it was worth because you had a payment plan instead of just paying cash? (source: Dave Ramsey)

Joint everything. monthly set budget +joint review. AND if you have any debt it gets paid 1st after tithe & housing.
Divided spouses accts bandaid underdeveloped marriage transparency, honesty, and accountability. The # of accounts sole purpose is merely corralling the undisciplined and frivolous. Seriously..hiding your $ in an online bank acct? Now I know where & who those TV ads for reclaim your lost $ now! are for.
Confession:I pretended there is $0 for anything 7 yrs ago…but I know better now, the peace of seeing God's provision & funds exactly spent as allocated is a comfort. The former is game playing.

We have chequing & savings only. His, hers and slush $ are all in cash, not separate accounts. It's more practical. And thankfully, here in Canada we have free healthcare, so we don't require the health account.

I'm not sure why you claim having 7 accounts will "save your family hundreds"?
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This is a great article. I think this advice can help both young and old people. There have been a lot of issues coming from the new healthcare laws. Senior citizens have been loosing income because of this and are having trouble paying medical bills. I personally think it is a good idea for them to open a credit union checking account because it is easy to apply and they can get great rates. Obviously, they would no purpose to get a business checking account but I think both share some of the same advantages.

I love this post. I read it a few months ago, and just wrote a new blog post on my blog and used Google to find this blog post again! Check the link up out! 🙂
My recent post My &quot;Fabulous Four&quot; Bank Accounts

hello it’s me again, your new follower. what’s the magical number for wife and husband account, regular saving account and health saving account? As you said it is 5-10% for emergency saving account. I know this is a personal choice but it would be great if you give me the reasonable number……sorry for bugging you.

This seems like a really good idea. I’ve actually been playing around with an idea like this in my head. I feel like I never know where our money is going but havent been successful in getting my husband on board. He knows that if I open more accounts to allocate our money that he will see less and spend less (my goal exactly…he just likes to eat out a lot haha). Thanks for the breakdown, it may be just what puts me over the edge to get to work on it in our life!

This is brilliant. I am going to try this as ou 2014 budget. I have struggled keeping track of expenses once our budget has been made. Eventually I get frustrated and re-vamp and then the vicious cycle starts all over again. We already have 6 accounts they just aren’t allocated like you have them set up…but they will be soon! I am very excited! With the constant moving we do its difficult to not go over budget or see where money is going. I’m glad that you are able to break this down to simplicity so anyone can use it. I’m hoping it works for me and mine! Thank you!

Ok, I just found your blog. Obsessed. My husband and I got married about a year and a half ago and are now expecting baby #1. We both aren’t so great with money (not too spendy, but definitely not too save-y either…) I am sort of an OCD freak, so this concept really jives with my brain. I can’t wait to start. We currently have one joint checking and one credit card with the same credit union. We have been wanting to open a more commercial credit card that can earn us rewards (so far I’m debating between Chase Freedom and either the Amex Costco card or another Amex one with cash rewards). My main question is this: I want to set up more checking accounts (will be using the Chase 360 for one savings, and our normal credit union savings for the other), but I just don’t know who to go with. Also, didn’t your blog post say you use your credit card for all your purchases anyway and then pay it off each month? If you’re doing that, couldn’t your credit card almost be your wife account that just gets paid from the regular home-base checking? I’m just trying to map it all in my head and figure out how many new checking accounts to open (I only want to open “free” ones and my credit union does not have the option for sub or multiple accounts).

I used to work at a credit union so I was really good at budgeting and knowing where my money went. Over time, I didn’t do so well. This year I want to get back to budgeting. Thank you for all the tips and videos. I’ve written down some really good ideas that I’m going to start with. We’ve always had multiple accounts for savings, checking, emergencies, fun money, medical, etc. It has always worked for us and definitely cut down on the money fights. One thing I suggest to friends who constantly fight about money with their spouse, is to have their own fun account budget. We used to fight about what each other spent money on. Such as clothes, sporting goods, etc. Once we set up a budget (which has changed throughout the years, as our salary changes), our fighting is gone! I can spend that $x on whatever I want each month, the same as he can. We just don’t go over that month. And if we want something that is more than $x, we have to save for it. It works wonders for us.

This would be pointless for me because most of these accounts would remain empty most of the time. After bills, i only have about 20 percent of my income leftover… Half of that goes into my savings which ends up being emptied when my car needs to be repaired. I disagree with the statement “You don’t have to be rich to use this.” That depends on your idea of rich.

Yes Stephanie, you’re right, it’s super hard to do when you live paycheck to paycheck. But you have to realize that we started implementing this when we were in the RED each month, sometimes not making enough to pay our bills. It doesn’t have to be perfect, and you certainly should adapt it to fit what works for you. But we used a simplified version of this when our finances were very tight. We started out by having a few accounts just to organize where our money should go – one for debt, one for bills, one for every day expenses. We had to work up to putting money away into savings (it took us months and months before we had enough). So just start off small and it should work out for you still!

Wow – that sounds like a lot of accounts. I love it in theory – and the objective is basically to help one budget more – that said, I do not have that many accounts nor do I want it. i do, however, use mint religiously – and I actually export their transactions into a workbook I created and then go in and categorize each item – which then automatically plops it into my profit and loss statement summary by month and item – so I know exactly what we’re spending on what and can classify every single transaction. We are always saving, we are always trying not to spend, but we don’t have separate accounts – just line items per my workbook to let us know how we’re doing each month I do a look back and then we know how to adjust for the next month. Overall, we are doing okay with saving about 20%, spending 70% and giving back 10%. Buying a house and taking on $250K of a loan and beginning to pay that back has slightly altered our ability to always maintain a savings of 20% but we’ve still managed about 5-20% even with the down payment. I think budgeting is a way of life but until you have it down – methods like these are great to help you get into the habit and force you into analyzing and adjusting as you go along. Kudos!

OK, I am interested in trying this. I can see the pros to this logic. We have been married for 21 years, have 4 kids, he is a teacher & I am a stay at home mom. So we most definitely live paycheck to paycheck. How do you handle paying for things? Do you carry around 5 or 6 debit cards? How do you know which card goes to which account? How do you know which account is earmarked for each category like, savings or family checking etc. when looking at the accounts online? I don’t carry a purse (crime is up in the area). I usually just put my card & ID in my pocket when I go to the store.
Can you help me know how to simplify this? I really want to try to do this.
Thanks.
Love & Prayers,

Great ideas! My question for you is how can you save 20% per month outside retirement? Most experts recommend saving at least 10% towards retirement…that means saving 305 of your income. That’s very hard for most people. I do 15% into retirement and another 3% towards a future car. Vacations I pay for through my tax refund. I can’t possibly save more–I live in a very expensive city on an average income.

Question .. the account that is provisioned for your direct deposit .. your home base account .. would you get a debit card for that account or no? We currently do have a debit on our account which I honestly do not like since we are both dipping into it (we only have two accounts presently). Since this home base account is where we are paying most of our fixed bills I would think not to have it set up with a debit card. We can always transfer money to our personal accounts or other accounts with debit cards.

I was reviewing the rules for the Family Emergency Savings, and in the video you say 5-10% of your income should go directly here, but in this post you say 20%. Also, you say in the video 3-6 months’ worth of money to live off of in this account, but in the post you say 6-12 months. I can see how the more the merrier would be ideal, but if you could clarify how those percentages factor into the others you have for the rest of the monthly budgeting plan, it would really help me out. I’m a little stuck on the numbers! 🙂
-Peace & Love, Sarah

Thanks for the questions Sarah! The 7 bank accounts post was originally recorded an originally posted years ago. I am able to update posts, but am unable to update videos. So go by what the posts say, as I will periodically update them throughout the years! Thanks for reading and asking! XOXO

Nope! You still need health insurance, it’s just a savings account that helps you set money aside for it so you don’t have to dip into your monthly spending money or regular savings accounts to pay medical bills.

ok – so if you don’t make enough to put 20% of your paycheck into savings how do you decide on a % at all? my family of 3 lives paycheck to paycheck (basically) and putting in 20% of each paycheck would take away half the grocery money. what would you suggest?

Yes I’ve been there! There’s no way we could’ve afforded 20%. If you’re living paycheck to paycheck you need to do 2 things: make more money, and cut your spending. Focus on that first, then if you have debt, put all extra toward debt asap because that will free up even more cash. Once you are in a more comfortable spot and your debt is paid off, you can put a little extra into savings each month as you (over the next year or two) inch down into the 70% spending range. Hang in there and work hard, it will happen! XO

I was searching for a good way to get organize and take control of our budget! I love this post and I am excited to get going with the new (to me) system!

Can you give advice as to where you would pull money from for Christmas and Birthday gifts for others? My husband and I both have large families so Christmas and birthdays can get very expensive fast.
Also, my husband uses chewing tobacco so I am constantly having to budget in that cost. Would you put that in the husband account or include it in the $100 per person grocery budget?

Great questions! For Birthdays and showers that just comes out of my “other” budget. For Christmas we set a budget per-person and try to set money aside all year, you could even open a separate bank account for that if you wanted. As for the chewing tobacco that is a consumable, just like food or even makeup and toiletries, so that would be considered grocery. However…it’s a hobby and not necessity so I would have that come out of his budget. If he wants to spend all his “fun” money on tobacco then that’s his choice, kind of a thing. Thanks for reading!

i’m new to budgeting so this is all confusing BUT i want to do this =). our credit union does not allow for us to have more than one checking account. does anyone know of a bank that will allow to have 7 accounts? i don’t want to have more than one bank, and don’t want to do the envelope system on paper since i pay online, just want to do it online thought a bank.

We bank at Chase bank and they are easy to work with! I’m surprised your credit union doesn’t allow multiple checking accounts, never heard of that before. I recommend Mountain America Credit Union, they not only welcome as many accounts as you want, but will often times pay you for opening them! If you are in their area of business, you should definitely check them out.

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I’m confused on how to start. Should all the money needed for the month be in the main checking account at the start of the month and doled out from there, with that month’s pay checks being held for next month’s expenses? That requires a lot of start up money. Are there any steps for starting?

You forgot retirement account(s). 401k, IRA and possibly trading account. Social security, medicare and medicaid are not enough and you can’t even really count on them existing when you retire with the deficit the United States is running.

An example – if gross income including income tax is $150 and spending is $50, the spending rate is 33% / available to save is 66%. However, if income taxes are $10 in the above example, the spending rate becomes 36% / available to save is 64%. The latter seems more precise, at least to my mind.

Ok so I’m super pumped to do this but I do have a question about the Family Checking account. Since I live in a place where we can go from 100 degrees in the summer to 4 degrees in the winter, my utility accounts vary GREATLY throughout the year. Example, last January, my gas bill was $125.57, but in September it was $15.76. This makes a 6 month average work great for a couple months but would be WAY to little for other months. We don’t keep my house sweltering hot but I have young children that I’d prefer not to freeze out in the night in the winter and risk getting them sick. I don’t feel like we need to keep the temperature under better control, I’m just not sure of how to budget this correctly. The utilities somewhat balance themselves out because my Electric bill reacts somewhat in the opposite direction (high in the summer, low in winter because of A/C use), just not exactly in the same ratio.

How can I account for the fluctuation of the bills throughout the year? Would I just use this as my base, allocate to the other accounts and not so much budget this one but use what I need for necessary utilities then transfer what’s left after paying the necessary bills at the end of the month to my savings or slush account? I just don’t feel it’s “budgetable” (I may have made that word up) since it fluctuates so much with the seasons.

1. It is said that 6 – 12 months of income should be saved in the emergency savings. Then it is said that 3 months of expenses should be saved in the family savings. Am I reading that right? The emergency fund would have $6,000 in it if I made $1000 and month and the family savings would have $1500 in it if our expenses were $500 a month (and not $3,000). Yes?

2. When should the emergency and family savings accounts be implemented? Once all debt (credit card, mortgage, car loan) is paid off or would those start out before debt is paid but with just a little at a time (like 10% income to emergency and 10% to family).

[…] The 7 bank accounts every family should have – Fun Cheap … – If your accounts are all open with different banks, you can use Mint.com which is a free service that pulls information from all your banks and presents them on a …… […]

[…] Ok, I have read a few books about using cash only and split it up to put into jars or envelopes. I love that idea. I would love that idea even more if I didn’t lose receipts all the time. One night, while looking at Pinterest, I saw this article about using seven bank accounts. Now this is what I can do. I like to use the bank to track my transactions. Anytime I have a question, I can log in to my bank accounts and see what I missed. My bank accounts were pretty much set up already, I had other motives for it and some I just forgot about it. Here is the break down for the bank accounts and what they are used for. 1. Family emergency savings – at least 6 months of income here. 2. Family regular savings – for vacations, Christmas, new tv, etc. 3. Family chequing/expenses – reserved for bill payments, family expenses. 4. Wife/single mom chequing – for daily spending on food, fuel, clothes, 5. Husband – same as #4. 6. Health – health expenses, braces, medication. 7. Slush fund – Anything extra savings here. Now I don’t have a husband, so I don’t need to have a husband bank account. And as for my slush fund, I think I’ll open an account for that once I pay the debt off. My family chequing/expense account is where I put all my income, and pay all the bills online. This account also set up for preauthorized bill payments, like car insurance. I keep this account at a separate bank than the one for my single mom chequing account. Once I get paid, I email transfer the budget amount for food, fuel and kids to single mom account. There is no ‘accidentaly’ dipping into the family chequing/expense account. And as for the family emergency savings account, at another different bank with high interest on savings. I don’t have a debit card for this so I am less likely to dip into that. I will update in a few months to see how it is going and if I made any changes. For more detail about the seven bank accounts, please check out Fun, Cheap or Free […]

[…] The 7 bank accounts every family should have – Fun Cheap … – I’m sure many of you have heard of this “The 7 Bank Accounts Every Family Should Have” post. It was from quite some time ago and was in need of some updating…. […]

Hi, I'm Jordan

AKA, the Fun Cheap or Free Queen. As a Family Finance and Frugal Living expert, my mission is to redefine frugal and teach you to live an ABUNDANT life...on any budget. It's not only possible, it's FUN. Want proof? Read my story and see... [read more]